Wholesale Inventories Rise More Than Expected

A build in auto inventories as well as for machinery drove wholesale inventories up a much higher-than-expected 0.9 percent in June. Sales at the wholesale level rose only 0.1 percent in the month, in turn driving the stock-to-sales ratio up 1 notch to a less-than-lean 1.30. This ratio was at 1.19 in June last year. A rise in inventories relative to sales can be a negative signal for future employment and production, but the build in this case is centered in autos and machinery where final sales have been solid, especially for autos. Watch for the business inventories report, which will include data from the retail sector, on Thursday's calendar.

Recent History Of This Indicator: Wholesale inventories are expected to ease to a 0.4 percent gain in data for June vs May's outsized gain of 0.8 percent. Inventories in the wholesale sector had look bloated earlier in the year but have since stabilized, with the stock-to-sales ratio steady in May at 1.29.