US Q2 GDP tracking estimate rises to 3.3% on June inventories

Business inventories rose 0.8% m/m in June, well above our (0.4%) and consensus (0.3%) expectations. The stronger-than-expected reading on monthly inventory growth was driven by a 0.9% m/m gain in retail inventories. A portion of this stronger-than-expected retail inventory stocking was at motor vehicle and parts dealers (1.4% m/m, previous: 0.0%).

 However, retail inventories ex autos rose a strong 0.7% m/m in June. The May reading for retail inventories ex autos was also revised up to 0.3% m/m from 0.1% m/m. Together, these revised data show a stronger profile for Q2 private inventory investment than the BEA had assumed in the advance estimate of Q2 GDP.

"The stronger-than-assumed inventory data through June boosted our Q2 GDP tracking estimate to 3.3% after rounding", says Barclays.