WASHINGTON – U.S. wholesalers restocked their warehouses at a modest pace in June for a second consecutive month, a sign that they may anticipate slower growth ahead.
The Commerce Department said Friday that wholesale inventories rose 0.3 percent, the same as the previous month. May’s inventory gain was revised down from 0.5 percent.
The slowdown in restocking likely reflects weaker wholesale sales, which grew just 0.2 percent in June, down from 0.7 percent in May.
In June, companies boosted stockpiles of furniture, lumber, computer equipment and metals, including steel. But auto inventories fell, even as sales jumped, suggesting that automakers will need to keep cranking out cars to meet strong demand.
The report shows that inventory levels are roughly in line with sales. That means wholesalers likely haven’t gone too far in restocking their goods. As a result, they probably won’t have to slow restocking in the coming months.
Slower rebuilding of inventories can drag on growth because it means fewer orders for factory goods.
That is what happened in the first three months of the year, when a big downshift in inventory building subtracted 1.2 percentage points from the economy’s growth. The economy contracted at a sharp 2.1 percent annual rate. Harsh winter weather and a big drop in exports also contributed to the decline.
The slowdown was temporary, however. Inventory restocking contributed about 1.7 percentage points to growth in the second quarter, when the economy expanded at a 4 percent annual rate.
The report Friday covers inventories held at the wholesale level. A later report will cover manufacturing and retail inventories.