U.S. wholesale inventories fell more than initially estimated in in July as sales accelerated further, suggesting inventories could still be a drag on economic growth in the third quarter.
The Commerce Department said on Thursday that wholesale inventories dropped 0.3% in July, instead of dipping 0.1% as estimated last month. Stocks at wholesalers fell 5.6% in June. The component of wholesale inventories that goes into the calculation of gross domestic product fell 0.3% in July.
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.
Stocks of motor vehicles and parts dropped 0.6% in July.
Sales at wholesalers increased 4.6% in July after jumping 9.0% in June. At July's sales pace it would take wholesalers 1.32 months to clear shelves, down from 1.38 months in June. (Reporting by Lucia Mutikani, Editing by Chizu Nomiyama)