GDP growth a question mark as wholesale inventories miss
U.S. wholesale inventories unexpectedly fell for a second straight month in June, which could prompt economists to mark down their second-quarter growth estimates after they recently raised them.
The Commerce Department said on Friday wholesale inventories fell 0.2 percent after declining 0.6 percent in May.
Economists polled by Reuters had expected stocks at wholesalers to rebound 0.4 percent after a previously reported 0.5 percent fall.
Inventories are a key component of gross domestic product changes. Excluding autos, inventories were flat. This component goes into the calculation of GDP. The government last week reported that gross domestic product expanded at a 1.7 percent annual pace in the second quarter.
However, factory orders data last week showed nondurable manufacturing inventories in June were a bit higher than the government had assumed in its advance GDP growth estimate.
Trade data this week also showed a smaller deficit than the government had factored in, leading economists to anticipate that second-quarter GDP growth could be raised to as high as a 2.5 percent pace later this month.
But the surprise fall in inventories could prompt economists to lower their GDP growth estimates.
Inventories added less than half a percentage point to second-quarter GDP growth.
Wholesale inventories in June were pulled down by automobile stocks which tumbled 1.5 percent, the most since December. Outside automobiles, stocks of electrical goods, hardware, paper, metals and apparel also fell.
Sales at wholesalers rose 0.4 percent after increasing 1.5 percent in May. Economists had expected sales to rise 0.7 percent.
At June's sales pace it would take 1.17 months to clear shelves, the lowest since April last year. The inventories/sales ratio was 1.18 months in May.