US business inventories rise moderately in August
SPY•US business inventories rose 0.4% in August after jumping 0.9% in July, while business sales increased 1.1%. Economists estimate trade could subtract as much as 2.5 percentage points from third-quarter GDP growth, with restocking expected to offset the hit from imports.
1. Inventories increase
Business inventories rose 0.4% in August after surging 0.9% in July, and were up 4.6% from a year earlier. The increase matched economists’ expectations. Businesses are rebuilding inventories after five straight quarters of drawdowns, with domestic demand, mostly consumer spending and investment in AI, supporting the effort.
2. Trade and GDP outlook
The restocking effort is mostly reliant on imports, which are a drag on GDP growth. Economists estimate trade could subtract as much as 2.5 percentage points from third-quarter GDP growth, but expect restocking to offset the hit. Third-quarter growth estimates are mostly around a 3.0% annualized rate, after the economy grew at a 2.2% pace in the second quarter, when inventories subtracted 0.53 percentage point from GDP growth.
3. Sales and stock levels
Business sales rose 1.1% in August after a 0.5% increase in July. Retail inventories increased 0.2%, while wholesale inventories and manufacturers’ stocks each rose 0.5%. At August’s sales pace, businesses would take 1.33 months to clear shelves, down from 1.34 months in July.
