U.S. Wholesale Inventories Rose 0.3% in June

U.S. Wholesale

Inventory to Sales Ratio at 1.33

New York, NY — U.S. economic growth didn’t seem to go that well in the second quarter. But now, one indicator is saying that second-quarter GDP could be better than the first estimate.

On Tuesday August 9, the U.S. Department of Commerce said that wholesale inventories were $590.9 billion at the end of June, up 0.3% from May. Total inventories were also up 0.2% from the level in June 2015. (Source: “Monthly Wholesale Trade: Sales and Inventories June 2016,” U.S. Department of Commerce, August 9, 2016.)

Note that the percentage change from May to June was revised from the advance estimate of virtually unchanged to up 0.3%. At the same time, inventories for May were revised up to show a 0.2% increase from April’s level instead of a previously reported 0.1% gain.

In particular, durable goods inventories declined 0.3% from May to June, and were down 2.4% from the year-ago period. Inventories of electrical and electronic goods were down 0.9% last month, while inventories of lumber and other construction materials increased by 1.8%. Inventories of drugs and druggists’ sundries rose 4.9%, while inventories of farm product raw materials were up 4.0%.

While inventories are on the rise, sales increased as well. In June, sales of merchant wholesalers came in at $444.6 billion, up 1.9% from May. However, it was down 0.4% from the level in June 2015. The April to May’s change in sales of merchant wholesalers were revised from the preliminary estimate of up 0.5% to up 0.7%.

With increases in both sales and inventories, June’s inventories to sales ratio for merchant wholesalers was 1.33. The ratio in June 2015 was 1.32.

Note that the advance estimate of no change in wholesale inventories in June was included in the calculation of second quarter gross domestic product (GDP). Last month, the Department of Commerce reported that real GDP increased at an annual rate of 1.2% in the second-quarter of 2016. The result was far below economists’ forecast of 2.6% growth in GDP. (Source: “,” Bureau of Economic Analysis, July 29, 2016.)

With better than previously estimated wholesale inventories in June, second-quarter GDP growth in the U.S. could get a mild upward revision.

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