WASHINGTON (Reuters) – U.S. business inventories rose in July, but the pace of growth slowed sharply from previous months, likely as cooling demand from rising interest rates forced businesses to remain cautious.
Business inventories rose 0.6% after rising 1.4% in June, the Commerce Department said on Thursday. Inventories are an important component of gross domestic product. The July increase was in line with economists’ expectations.
Inventory increased by .4% year-on-year in July.
Retail inventories rose 1.2% in July instead of the 1.1% estimated in an advance report released last month. This followed a 2.0% increase in June.
Estimated vehicle inventory rose 3.5% last month. They climbed 3.3% in June.
Retail inventories excluding automobiles, a measure of GDP, rose an estimated 0.4% last month.
Relative to the pace of activity in the January-March quarter, the pace of inventory buildup in the second quarter weighed on GDP in the previous quarter. The economy contracted at an annualized rate of 0.6% in the second quarter after contracting at a 1.6% pace in the January-March period.
Wholesale inventories increased 0.6% in July. Manufacturers’ inventories rose 0.1%.
Business sales fell 0.9% in July after rising 1.2% in June. At the sales pace in July, it would take companies 1.32 months to clear shelves, up from 1.30 months in June.