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.
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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.