U.S. wholesale inventories in June recorded their largest drop since September as the value of petroleum stocks fell by the most in more than 3-1/2 years, government data showed on Thursday.
Total wholesale inventories slipped 0.2% to $481.9 billion, the Commerce Department said, after being almost flat in May. The percentage decline in June was the largest since September.
Economists polled by Reuters had expected stocks of unsold goods at U.S. wholesalers to rise 0.3% after increasing by a previously reported 0.3% in May.
Inventories are a key component of gross domestic product changes. A rise in inventories added about a third of percentage point to second-quarter GDP, support that could be lost in the July-September period as weak domestic demand prompts businesses to cut back stocks. The economy grew at a 1.5% annual pace in the second quarter. In June, the value of petroleum stocks tumbled 8.7%, the largest fall since October 2008, partly reflecting weak crude oil prices.
Outside petroleum, automobile inventories fell 0.7% in June, while metals dropped 0.9% and furniture stocks fell 0.7%. In June, sales at wholesalers dropped 1.4%, the most since March 2009, after falling 1.1% the prior month. Economists had expected sales to edge up 0.1%.
Sales declines at wholesalers in June were almost across the board, with furniture falling 2.1 percent and machinery dropping 2.8%. Petroleum sales dropped 5.3%, but auto sales increased 1.2%.
At June's weak sales pace it would take 1.20 months to clear shelves, the most since December 2009, up from 1.18 months in May.