US stockpiles at wholesale level likely to show gain in July, reflecting stronger sales

MarketsAssociated Press

The Commerce Department reports on wholesale stockpiles and sales in July. The report will be issued at 10 a.m. EDT Tuesday.

STOCKPILES AND SALES UP: The expectation is that sales at the wholesale level rose 0.6 percent in July, according to a survey of economists by FactSet. Many analysts are also looking for an increase in stockpiles that would reflect the strength in sales.

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INVENTORY SLOWDOWN: In June, U.S. wholesalers restocked at a modest pace for a second straight month that reflected slower sales. Sales grew just 0.2 percent in June after a much stronger advance in May.

Inventory growth is closely watched by economists. When companies add goods to their stockpiles, it shows optimism about future demand. Increasing orders to restock lifts factory production and overall economic growth.

In the April-June quarter, an acceleration in inventory building contributed one-third of the 4.2 percent growth rate turned in during the spring quarter.

During the first three months of the year, a slowdown in stockpiling had subtracted 1.2 percentage points from growth. That was a major factor sending the economy into reverse during the first quarter when the overall economy contracted at an annual rate of 2.1 percent.

For the rest of the year, most analysts predict that inventory building will support economic growth but will not exhibit the sharp swings seen in the first half of this year.