July Business Inventories rose a greater than expected 1% vs the forecast of a gain of .7% and captures the big upside seen in last week’s wholesale data which makes up about 25% of today’s figure. It’s the biggest monthly gain since July ’08. With this data point following the lower than expected July Trade Deficit last week and today’s slightly better than expected retail sales #, Q3 GDP estimates should move closer to the 2% level from many estimates of about 1.5%. Either way, the pace remains punk but better than expected just a few weeks ago. July sales rose .7% and kept the inventory to sales ratio unchanged at 1.26, just off the record low of 1.23 back in April. Bottom line, on one hand the rise in inventories will boost GDP but we need to see sustainability in final demand so as to keep the rise in inventories from being unwanted.
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