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US wholesale inventories remain unchanged.

WASHINGTON: US wholesale inventories were unchanged in July as previously reported and sales recorded their biggest drop in six months, suggesting a modest boost to third-quarter economic growth from inventory investment. An outright drop in inventory investment weighed heavily on economic growth in the second quarter and some economists believe the inventory correction is close to running its course. The Commerce Department said on Friday that the flat reading followed an upwardly revised 0.3 percent increase in June. Wholesale inventories were previously reported to have gained 0.2 percent in June. "The trend toward an increase of inventories at the wholesale level gives us greater confidence that GDP growth will be well above 2 percent in the third quarter as factories restart their engines and start to produce the goods to replenish the store shelves," said Chris Rupkey, chief economist at MUFG Union Bank in New York. The department in its recently introduced monthly advance economic indicators report published last month had estimated that wholesale inventories would be unchanged in July. The component of wholesale inventories that goes into the calculation of GDP - wholesale stocks excluding autos - was also unchanged in July. Following the report, the Atlanta Federal Reserve trimmed its third-quarter GDP estimate by two-tenths of a percentage point to a 3.3 percent annual rate. "The forecast of the contribution of inventory investment to third-quarter real GDP growth decreased from 0.62 percentage points to 0.57 percentage points after this morning's wholesale trade report," it said.

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Publication:Arab News (Jeddah, Saudi Arabia)
Date:Sep 10, 2016
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