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While the Commerce Department released a report Tuesday morning showing a continued decrease in business inventories in the month of July, the report also showed a modest increase in business sales.
The report showed that business inventories fell by 1.0 percent in July following a revised 1.4 percent decrease in June. With the decrease, inventories fell for the twelfth consecutive month.
Economists had been expecting inventories to decrease by about 0.9 percent compared to the 1.1 percent drop originally reported for the previous month.
Peter Boockvar, equity strategist for Miller Tabak, said, "Because the number was about in line with expectations, third quarter GDP estimates should not change."
However, Boockvar noted that the data is somewhat dated and said future months should reflect the "expected 2nd half rebound or at minimum a stabilization in the rate of decline in inventories and its hoped for contribution to GDP growth."
The drop in inventories was partly due to a 1.4 percent drop in inventories at merchant wholesalers. Inventories at retailers and manufacturers also fell, slipping by 1.0 percent and 0.7 percent, respectively.
At the same time, the Commerce Department said that business sales edged up 0.1 percent in July after jumping 1.1 percent in June.
A 0.5 percent increase in sales by merchant wholesalers contributed to modest increase in sales, more than offsetting a 0.2 percent drop in sales by retailers. Sales by manufacturers were unchanged.
With inventories falling and sales rising, the total business inventories/sales ratio edged down to 1.36 in July from 1.38 in June, falling to its lowest level since October of 2008.
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