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Wholesale Inventories Rise 0.7%

Signaling a stronger third quarter of GDP growth in the U.S., total wholesale inventories increased by 0.7% in August to $538 billion.

Signaling a stronger third quarter of GDP growth in the U.S., total wholesale inventories increased by 0.7% in August to $538 billion, according to a newly-released government report. The jump in inventories beat consensus forecasts, rising by its highest level in four months. The component that factors into GDP – wholesale stockpiles excluding autos – was up 0.7%. The Commerce Department also revised upward July wholesale inventories by $700 million, a total monthly gain of 0.3%.

The latest August data shows computer inventories rose 4.5%, with lumber supplies and construction materials up 1.5%, and automotive stockpiles increasing 0.6%. Inventories of nondurable goods increased, as well, coming in higher than July of this year and August of 2013.

While inventories increased in August, wholesale sales dropped by 0.7%, reaching only $453.9 billion, a number that fell below forecasts. While most economists predicted a 0.4% increase, the actual decline was the largest since a 1.8% decrease in January. The July preliminary sales estimate was also revised downward by $1.6 billion, or 0.3% percent. Sales of petroleum and petroleum products dropped 4.2%, while sales of farm product raw materials were down 3.8%. August sales of durable goods increased 0.1% and sales of metals and minerals rose 1.6%.

The combined data, according to analysts, indicate that August inventories rose partly because sales slowed more than wholesalers expected. It’s now more likely wholesalers will cut back their orders in the coming months. At August’s pace of sales, it would take 1.19 months to clear shelves, the highest rate since February.