Business Inventories Unchanged

Inventories were unchanged in lagging data for July while sales retreated 0.2 percent. The stock-to-sales ratio was unchanged at 1.39. Retail inventories fell 0.3 percent with auto inventories down 0.2 percent. Wholesale inventories were unchanged in July while inventories at manufacturers, a sector where demand is soft, edged up 0.1 percent.

An outright drop in inventory investment subtracted almost 1.3 percentage points from second quarter GDP growth -- the largest drag in more than two years. Inventories have weighed on GDP growth since the second quarter of 2015. Expectations are for inventory accumulation to rebound in the third quarter adding to GDP growth.

Recent History Of This Indicator:
Tight management has been keeping in check business inventories which are now becoming leaner as the economic pace picks up. Retail demand is the central factor for inventories and as long as retail sales remain solid, the risk of inventory overhang is limited.