US business inventories flat, could weigh on Q2 GDP

Manufacturing warehouse inventory
Tim Boyle | Bloomberg | Getty Images

Inventories at U.S. businesses were flat in June and firms outside the auto sector cut back on restocking, which might weigh against estimates for economic growth in the second quarter.

Overall inventories were unchanged during the month, the Commerce Department said on Tuesday. Economists polled by Reuters had forecast overall inventories to rise 0.2 percent in June.

Inventories are a key component of gross domestic product changes. Retail inventories excluding autos—which go into the calculation of GDP—decreased 0.1 percent after rising 0.2 percent in May.

Inventories were down in most types of establishments, from clothing and food stores to department stores.

Businesses are being cautious about restocking against the backdrop of lackluster domestic demand. The report suggested inventories might have provided less of a boost to second quarter economic growth than initially estimated.

The government last month gave an early estimate for gross domestic product, which showed growth at a 1.7 percent annual rate in the April-June period.

Business sales increased 0.2 percent in June. At June's sales pace, it would take 1.29 months for businesses to clear shelves, unchanged from May.