The U.S. Census Bureau released the numbers for the monthly wholesale report for July 2014. The total inventories only rose 0.1%, against a Dow Jones and Bloomberg consensus estimates of 0.5%. This compares to the previous month’s readings at 0.3%. Overall the inventory gain in July was the smallest monthly gain since July of 2013.
Sales signaled a strong increase in July with a reading of 0.7%. This would pull the stock-to-sales ratio down slightly to a lean 1.16 from the previous level of 1.17. This ratio is unchanged from the previous year.
These low inventories realize the need for restocking while strong sales imply a strong demand from the retail sector.
Wholesale inventories of farm products, computer equipment and petroleum products fell sharply in the July.
Apparel, autos and drugs rose to meet strong retail demand due to increased manufacturing output.
This report could act as a drag against the business inventories report on Friday. The consensus is currently calling for a 0.4% build.
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