US Wholesale Inventories Surge 1.3% in July After Five Quarters

U.S. wholesale inventories surged 1.3% in July, rebounding sharply after businesses drew down stocks for five consecutive quarters and setting up inventory levels to contribute positively to third-quarter gross domestic product growth.

Stocks at wholesalers jumped by an unrevised 1.3% in July, matching earlier estimates according to an Investing.com report. The monthly increase brought total wholesale inventories up 0.4% overall for the broader measure, while year-over-year figures showed a 5.7% increase compared to July of the previous year.

Breakdown of Durable and Nondurable Goods

The July surge was driven by widespread gains across both durable and nondurable sectors. Durable goods inventories rose 1.1% during the month, while nondurable goods shot up 1.6%.

Within the nondurable category, petroleum inventories stood out with a significant 6.5% increase. Meanwhile, wholesale sales rebounded 0.8% in July after dropping 2.9% in June, leaving the inventories-to-sales ratio at 1.20 months compared to 1.19 months in June.

Impact on Gross Domestic Product

The accumulation of wholesale stocks represents a notable reversal from recent economic trends. During the second quarter, shrinking inventories subtracted 0.72 percentage point from gross domestic product growth, a period in which the U.S. economy expanded at a 1.5% annualized rate.

With businesses restocking warehouses in July, economists anticipate that inventory investment will reverse its drag and add to economic output in the current period. Growth estimates for the July–September quarter are currently running well above a 2% pace, supported by the stronger stock figures.