US businesses increase stockpiles in July

U.S. businesses increased their stockpiles in July, but at a slower pace than in June. Sales also rose by a small amount.

Business inventories rose by a seasonally adjusted 0.2 percent in July, following June's gain of 0.5 percent, the Commerce Department said Friday. The June increase in inventories was the most since a 0.9 percent gain in November of last year.

Sales rose 0.2 percent in July, matching the June gain.

Economists expect that inventory growth will strengthen further in coming months and help support overall economic expansion.

Annual GDP growth improved to 3 percent in the second quarter of 2017. That follows a lackluster 1.2 percent expansion in the first quarter, which was slowed partly because inventories subtracted from overall economic activity.

Economists believe businesses rebuilding their stockpiles could add as much as a half percentage point to overall economic growth in the current quarter.

When businesses increase stockpiles, it is generally seen as a sign of their confidence that sales will increase in the coming months. A decrease in inventories can be a sign of pessimism about future sales.

July inventory gains were led by a 0.6 percent increase in stockpiles at the wholesale level and a 0.2 percent uptick in the manufacturing sector. Those increases helped offset a 0.1 percent drop-off in retail inventories.