Wholesale Inventories Decline for Record 11th Straight Month

Wholesale inventories were reduced at a faster pace than expected in July, but a bump in sales provides further hope that businesses will begin restocking, helping the economy to stabilize and perhaps create new jobs.

Inventories were slashed 1.4% in July, marking a record 11 straight months of declines. Moreover, the cutback in June was revised to -2.1% from an initially reported -1.7%. Both numbers represent a drag on Q3 GDP, though the contraction is smaller than what was seen in the second quarter. 

A cutback in inventories can also provide optimism, however. Greater than expected cutbacks in previous months means businesses may have to restock at a faster pace than originally thought, which provides a boost to current GDP estimates. That interpretation is backed up by the 0.5% boost in sales â€