Inventory Report a Bit Weaker than Expected
Advance Wholesale Inventories
Wholesale inventories for June, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $680.0 billion, up 0.2 percent from May 2019, and were up 7.9 percent from June 2018. The April 2019 to May 2019 percentage change was unrevised from the preliminary estimate of up 0.4 percent.
Advance Retail Inventories
Retail inventories for June, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $662.4 billion, down 0.1 percent from May 2019, and were up 4.4 percent from June 2018. The April 2019 to May 2019 percentage change was revised from up 0.4 percent to up 0.3 percent.
Wholesale inventories rose a lower-than-expected 0.2 percent in June, which together with an unexpected draw in retail inventories for June will be negatives for the inventory component of tomorrow's second-quarter GDP report. However unfavorable for the GDP calculation, low inventories at a time of strong consumer demand and what may be, based on this morning's durable goods report, improving business demand point to the need for inventory building which would be a plus for third quarter employment and production.
Strong consumer demand is an illusion. So is the notion that inventories are low.
Only in comparison to the early to mid-1990s can one consider inventories low. And look what happens in recessions.
Mike "Mish" Shedlock