HomeEconomic IndicatorAugust US wholesale inventories remain unchanged while sales experience a significant increase,...

August US wholesale inventories remain unchanged while sales experience a significant increase, according to Reuters.

US Wholesale Inventories Decline, Sales Surge

Wholesale Inventories Fall, Sales Increase

In August, U.S. wholesale inventories experienced a sixth consecutive month of decline. However, the pace of this decline slowed as sales surged. The Commerce Department reported a 0.1% slip in inventories, matching previous estimates. Stocks at wholesalers had fallen 0.3% in July. Despite expectations of no change, inventories dropped 1.0% on a year-on-year basis in August. Nevertheless, economists predict that business inventories will boost the gross domestic product (GDP) in the third quarter. In the second quarter, private inventory investment had no effect on GDP, following a significant drag in the first three months of the year.

Motor Vehicle Inventories Rise

In August, wholesale motor vehicle inventories rose by 2.1%, following a 0.3% increase in July. This increase is noteworthy as strikes by the United Auto Workers union at major automakers such as General Motors, Ford Motor, and Stellantis could potentially impact motor vehicle supply. Notably, there were decreases in stocks of furniture, computer equipment, metals, apparel, paper, drugs, chemicals, and electrical products. Conversely, stocks of hardware, machinery, petroleum, and groceries experienced a rise. Excluding autos, wholesale inventories fell by 0.4% in August, which is a crucial component in calculating GDP.

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Wholesalers Experience Sales Surge

Wholesalers witnessed a substantial 1.8% jump in sales during August, marking the largest increase since June 2022. This followed a 1.2% increase in July. Based on August’s sales pace, it would take wholesalers 1.36 months to clear their shelves, the lowest ratio since October 2022. This figure is down from the 1.39 months recorded in July.

As the U.S. wholesale industry continues to navigate changing market conditions, the decline in inventories alongside the surge in sales presents both opportunities and challenges. Businesses are carefully managing their inventory levels amidst expectations of weaker demand due to higher interest rates. However, economists are optimistic that business inventories will contribute to a boost in GDP for the third quarter.

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