WASHINGTON (Reuters) - U.S. business inventories increased for the first time this year in July likely reflecting a record jump in goods imports as trade flows start to normalize after being severely disrupted by the COVID-19 pandemic.
Business inventories edged up 0.1% in July after declining 1.1% in June, the Commerce Department said on Wednesday. Inventories, a key component of gross domestic product, had dropped for six straight months. Economists polled by Reuters had forecast business stocks gaining 0.1% in July.
Retail inventories rebounded 1.2% in July as estimated in an advance report published last month. That followed a 2.7% decrease in June. Goods imports soared a record 12.3% in July, the government reported last month.
Motor vehicle inventories increased 2.7% rather than 2.5% as previously reported. Retail inventories excluding autos, which go into the calculation of GDP, rose 0.6% as estimated last month.
An inventory drawdown contributed to GDP declining at a record 31.7% annualized rate in the second quarter. Inventories subtracted 3.5 percentage points from GDP, the most since the first quarter of 1988. Inventories have declined for five straight quarters. The economy fell into recession is February.
Wholesale inventories fell 0.3% in July. Stocks at manufacturers dropped 0.5%.
Business sales increased 3.2% in July after shooting up 8.6% in June. At July's sales pace, it would take 1.33 months for businesses to clear shelves, down from 1.37 months in June.