Wholesale inventories grew 0.9% m/m in June, coming in above our (0.4%) and consensus expectations (0.4%). Part of the boost to June wholesale inventory growth was due to a downward revision to May data. Wholesale inventories are now estimated to have grown 0.6% m/m in May, down from the initial estimate of 0.8%. Inventory growth was still stronger than expected in June, however, with wholesale inventories of nondurable goods up 2.3% m/m (previous: 1.0%).
Within this, wholesale petroleum inventories rose 3.6% m/m (previous: -0.6%) and raw farm product inventories surged 15.5% m/m (previous: 1.5%). While June wholesale inventory growth was reported above market expectations, the revised path for nonautomotive wholesale inventories through June actually stands below the BEA's assumptions incorporated in the advance estimate of Q2 GDP. As a result, Q2 GDP tracking estimate fell one-tenth, to 2.9% after rounding.
"Given the stronger-than-expected growth in wholesale inventories in June, we have revised up our forecast for Thursday's release of June business inventories to 0.4% m/m from 0.3% m/m", says Barclays.
