US stockpiles at wholesale level likely rose in August after big jump in sales in July

MarketsAssociated Press

The Commerce Department reports on wholesale stockpiles and sales in August. The report will be issued at 10 a.m. Eastern Thursday.

STOCKPILES AND SALES UP: Economists forecast that sales at the wholesale level rose 0.4 percent in August, according to a survey by FactSet. An increase in stockpiles that would reflect the strength in sales is also likely.

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SLOWER RESTOCKING: In July, U.S. wholesalers restocked their warehouses at the slowest pace in a year, boosting inventories by just 0.1 percent. Sales, meanwhile, jumped 0.7 percent.

The strong sales growth suggests companies will have to restock their shelves at a faster pace to keep up with demand. More restocking of goods lifts factory production and boosts economic growth.

Inventory growth is viewed as a barometer of business sentiment. When companies add goods to their stockpiles, it shows optimism about future demand. A cutback in inventories can be a sign that businesses are concerned about a potential economic slowdown and don't want to be stuck with unsold goods.

In the April-June quarter, faster inventory building by retailers, wholesalers, manufacturers and other businesses accounted for 1.4 percentage points of the 4.6 percent annual growth rate.

That followed a big cutback in restocking in the first three months of the year, which subtracted nearly 1.2 percentage points from growth. The economy contracted 2.1 percent in the January-March quarter, the worst showing since the recession ended in mid-2009.