WASHINGTON (Reuters) - U.S. wholesale inventories were slightly higher in June than previously reported, with sales posting their biggest drop in five months.
The Commerce Department said on Thursday wholesale inventories edged up 0.1 percent instead of being unchanged as it reported last month. Stocks at wholesalers rose 0.3 percent in May. They increased 5.1 percent year-on-year in June.
The component of wholesale inventories that goes into the calculation of gross domestic product - wholesale stocks excluding autos - gained 0.2 percent in June.
There was an outright inventory liquidation in the second quarter. As a result inventories subtracted a full percentage point from gross domestic product in the April-June quarter. The economy grew at a 4.1 percent annualized rate during that period, the fastest in nearly four years.
Against the backdrop of strong domestic demand, businesses are likely to boost stocks of goods, which should underpin production at factories. Economists expect a significant contribution from inventory accumulation to GDP growth in the third quarter.
In June, wholesale auto inventories fell 1.2 percent after declining 1.5 percent in May. Machinery inventories increased 0.8 percent after May’s 1.7 percent surge. Stocks of farm products tumbled 6.5 percent after dropping 2.6 percent in May.
Sales at wholesalers dipped 0.1 percent in June, the largest drop since January, following a 2.1 percent jump in May. At June’s sales pace it would take wholesalers 1.25 months to clear shelves, unchanged from May.
Reporting by Lucia Mutikani, Editing by Andrea Ricci