US wholesale inventories remain flat in July, suggest modest growth in Q3

Wholesale inventories in the United States remained unchanged during the month of July, while sales declined to six-month low during the same period, suggesting that a modest growth is awaiting at the start of the third quarter.

The US wholesale inventories remained flat in July, following an upwardly revised 0.3 percent increase in June. Wholesale inventories were previously reported to have gained 0.2 percent in June, data released by the US Department of Commerce showed Friday.

On the other hand, wholesale sales fell 0.4 percent in July, reversing a 1.7 percent increase in June. It was the biggest sales drop since January's 1.9 percent decline. Following the release of the data, the Atlanta Federal Reserve cut down on its third-quarter estimate of the gross domestic product by two-tenths of a percentage point to a 3.3 percent annual rate.

"The forecast of the contribution of inventory investment to third-quarter real GDP growth decreased from 0.62 percentage points to 0.57 percentage points after this morning's wholesale trade report," Reuters reported, citing the Atlanta Fed.

Meanwhile, weakness in inventory investment has remained a drag on the country’s growth during the second quarter, when businesses overall reduced inventories at the fastest pace since the fall of 2011, pulling the Q2 GDP to 1.1 percent.