US wholesale inventories rise; inventories-to-sales ratio hits lowest in seven years

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US wholesale inventories rise; inventories-to-sales ratio hits lowest in seven years

US Commerce Department data had unveiled on Friday that the world’s No 1 economy’s inventory-build had slowed in July and fallen far short of sales, as US wholesalers had cleared off their shelves in the shortest time in seven years, a latest sign of a growing demand amid a steep shortage in supplies.

As a matter of fact, inventory accumulation has been a core component of US GDP (gross domestic product) growth, as the segment of wholesale inventories entering into GDP-matrix rose 0.7 per cent in July. In factuality, a higher inventory-build is usually seen as an indicator to a salubrious consumers’ demand, while a healthful demand landscape in effect could help ramp up consumer spending, the lifeblood of US economy accountable for roughly 66 per cent of entire US economic activity.

US wholesale inventories rise ahead of an all-important holiday season

According to US Commerce Department data, US wholesale inventories grew by 0.6 per cent in August and wholesalers had stepped up stocks by 1.2 per cent in June, while US wholesale inventory-build jumped as much as 11.5 per cent in July compared to the same time a year earlier.

Nevertheless, a jubilant US business inventory build had pared some of its gains in second half of the year after having been caught up between a steep shortage in raw materials and a telescoped supply chain, while a latest leg of port congestion in China added to further headwinds.

However, US wholesalers’ sales volume rose 2.0 per cent in July following a 2.3 per cent uptick a month earlier, remarking the slowest pace to clear stockpiles since July 2014.