U.S. business inventories rise modestly as retail stocks fallU.S. business inventories rise modestly as retail stocks fall

WASHINGTON (Reuters) – U.S. business inventories increased modestly in July as stocks at retailers declined amid a rebound in sales.

The Commerce Department said on Friday that business inventories rose 0.2 percent after an unrevised 0.5 percent increase in June.

Inventories are a key component of gross domestic product. Retail inventories slipped 0.1 percent in July instead of the 0.2 percent decline estimated last month. Retail inventories rose 0.6 percent in June.

Motor vehicle inventories were unchanged instead of the previously reported 0.1 percent dip. Retail inventories excluding autos, which go into the calculation of GDP, fell 0.2 percent as reported last month. They rose 0.5 percent in June.

Inventory investment had a neutral impact on the second quarter’s 3.0 percent annualized growth pace after chopping off 1.46 percentage points in the first three months of the year.

Business sales increased 0.2 percent in July after a similar gain in June. At July’s sales pace, it would take 1.38 months for businesses to clear shelves, unchanged from June. Sales at retailers increased 0.3 percent in July after falling 0.1 percent in the prior month.

The inventories-to-sales ratio for motor vehicles was 2.26 months in July, unchanged from June.

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