WASHINGTON (Reuters) - U.S. wholesale inventories rebounded less than expected in July, suggesting restocking will probably not contribute much to economic growth in the third quarter.
The Commerce Department report on Wednesday was the latest signal of slower growth early in the July-September period and one Wall Street firm trimmed its gross domestic product estimate, while other economists anticipated no contribution from inventories.
Stocks at wholesalers edged up 0.1 percent in July after falling 0.2 percent in June. Economists polled by Reuters had expected wholesale inventories to rise 0.3 percent.
Inventories are a key component of GDP changes. Excluding autos, wholesale stocks nudged up 0.1 percent in July.
This component goes into the calculation of GDP. As a result of the tepid rise, Barclays pared its third-quarter growth estimate by a tenth of a percentage point to 1.6 percent.
Michael Englund, chief economist at Action Economics saw no boost to growth from restocking this quarter.
“For the third quarter, we assume 1.8 percent GDP growth with a flat inventory figure,” said Englund.
Data so far such as industrial production, durable goods orders, trade and consumer spending have suggested a loss of momentum in growth early in the third quarter after a fairly brisk 2.5 percent annual pace in the second quarter.
“It’s consistent with a drawdown in inventories. Overall what it means is that businesses in general are not adding to inventories,” said Yelena Shulyatyeva, an economist at BNP Paribas in New York.
“They would like to be on the cautious side and see what happens with the fiscal issues and other uncertainties building this fall.”
Retail inventory data for July, which is scheduled for release on Friday, will shed more light on the state of restocking early in the quarter. Inventories added 0.59 percentage point to second-quarter GDP growth.
Economists expect the pace of inventory accumulation to slow a bit in the July-September quarter after consumer spending moderated in the previous quarter.
Wholesale inventories in July were held back by a 1.2 percent drop in professional equipment stocks. That reflected a 3.5 percent tumble in computer equipment inventories.
The decline in professional equipment inventories was the largest since August last year and partially offset gains in automobile, petroleum, furniture, machinery, electrical and apparel stocks.
Sales at wholesalers nudged up 0.1 percent after rising 0.4 percent in June. Economists had expected sales to rise 0.4 percent in July.
Automobile sales tumbled 3.1 percent, the most since October. There were also declines in the sales of drugs, electrical goods, machinery and hardware. Furniture, apparel and petroleum sales increased as did sales of paper and metals.
At July’s sales pace it would take 1.17 months to clear shelves. The inventories/sales ratio was unchanged from June.
Reporting by Lucia Mutikani, additional reporting by Richard Leong in New York; Editing by Andrea Ricci