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U.S. business inventory accumulation slows in July By Reuters


© Reuters. FILE PHOTO – Warehouse workers work with stockpiled inventory at the ABT Electronics Facility, Glenview, Illinois. U.S., December 4, 2018. REUTERS/Richa Naidu

WASHINGTON (Reuters) – U.S. business inventory accumulation slowed in July as motor vehicle retailers struggled to restock amid an ongoing global semiconductor shortage, which is forcing automobile manufacturers to scale back production.

According to the Commerce Department, business inventories increased by 0.5% in July after an increase of 0.9% during June. The key ingredient of the gross domestic product’s output is inventory. The economists expected July to see an increase.

In July, inventories increased 7.2% year-over-year.

As per an advance report, July retail inventories grew 0.4%. This follows a 0.5% increase in June. According to last month’s estimates, motor vehicle inventories increased 0.2% rather than 0.3%.

Last month’s estimate of retail inventories, which exclude autos and go into GDP calculation, was 0.5%.

Although inventories in businesses were low in the first six months of 2018, shortages and supply problems caused by the COVID-19 epidemic, as well recent congestion at Chinese ports have hindered efforts to replenish them.

However, the second-half of the year will see the recovery of inventories which is expected to support economic growth.

In July, wholesale inventories grew 0.6%. The stock levels at the manufacturers increased 0.5%.

After rising 1.6% in June, business sales grew 0.5% in July. It would take businesses 1.25 months to get their shelves cleared, based on July’s sales pace. That is the same as June.

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