WASHINGTON—U.S. business inventories increased strongly in June amid signs of a large buildup of stocks in the retail sector despite a pickup in sales.
Business inventories rose 1.4 percent after advancing 1.6 percent in May, the Commerce Department said on Wednesday. Inventories are a key component of gross domestic product. June’s increase was in line with economists’ expectations.
Inventories increased 18.5 percent on a year-on-year basis in June.
Retail inventories increased 2.0 percent in June, as estimated in an advance report published last month. That followed a 1.6 percent gain in May. Motor vehicle inventories accelerated 3.3 percent instead of the 3.1 percent estimated last month. They advanced 2.4 percent in May.
Retail inventories excluding autos, which go into the calculation of GDP, increased 1.5 percent instead of 1.6 percent as estimated last month.
Business inventories increased at a strong clip in the first quarter as consumer spending slowed. The excess inventory, especially at retailers, left businesses with little appetite to continue restocking, which weighed on GDP in the second quarter.
Walmart said on Tuesday it had cleared most of its summer seasonal inventory, but still had work to do in reducing stock of electronics, home goods, and apparel.
The economy contracted at a 0.9 percent annualized rate in the second quarter after shrinking at a 1.6 percent pace in the January-March period.
Wholesale inventories increased 1.8 percent in June. Stocks at manufacturers climbed 0.4 percent.
Business sales rose 1.3 percent in June after gaining 1.0 percent in May. At June’s sales pace, it would take 1.30 months for businesses to clear shelves, unchanged from May.
