The U.S. July wholesale trade report slightly undershot estimates
The U.S. July wholesale trade report slightly undershot estimates with a lean wholesale sales bounce of 0.3% after a 3-month string of declines culminating in an unrevised -0.3% June drop. Analysts also saw a 0.2% rise for July inventories that matched the advance reading, after a -0.1% (was flat) June figure. Sales finally bounced after a weak performance in both Q1 and Q2. The inventory gain slightly undershot the sales increase in July, after growing much faster than sales since mid-2018 with a lift from tariff "front running," as importers are disproportionately captured in the wholesale report. The inventory-to-sales (I/S) ratio sustained a May-June pop to a 3-year high of 1.36 from 1.34 in April and 1.33 in March. Analysts still expect a Q2 GDP growth boost to 2.2% from a 2.0%, with a -$1 B trimming for wholesale inventories, alongside previously assumed revisions of $6 B for public construction, $1 B for net exports, -$1 B for residential construction, and -$2 B for nonresidential construction. Analysts expect Q3 GDP growth of 2.4% with a -$18 B inventory subtraction after an estimated -$48.0 (was -$47.0) B hit in Q2. Analysts still expect a 0.4% July business inventory rise after a -0.1% (was flat) June figure. Analysts saw a 0.2% July factory inventory increase, while the advance indicator report revealed a 0.8% July retail inventory pop.