WASHINGTON (Reuters) - U.S. business inventory accumulation slowed in July as motor vehicle retailers struggled to restock amid an ongoing global semiconductor shortage, which is forcing automobile manufacturers to scale back production.
Business inventories rose 0.5% after increasing 0.9% in June, the Commerce Department said on Thursday. Inventories are a key component of gross domestic product. July’s increase was in line with economists’ expectations.
Inventories rose 7.2% on a year-on-year basis in July.
Retail inventories gained 0.4% in July as estimated in an advance report published last month. That followed a 0.5% rise in June. Motor vehicle inventories climbed 0.2% instead of 0.3% as estimated last month.
Retail inventories excluding autos, which go into the calculation of GDP, rose 0.5% as estimated last month.
Business inventories were depleted in the first half of the year, but shortages amid persistent supply bottlenecks because of the COVID-19 pandemic and recent ports congestion in China are frustrating efforts to replenish stocks.
Still, inventory rebuilding is expected to underpin economic growth in the second half of the year.
Wholesale inventories increased 0.6% in July. Stocks at manufacturers advanced 0.5%.
Business sales gained 0.5% in July after rising 1.6% in June. At July’s sales pace, it would take 1.25 months for businesses to clear shelves, unchanged from June.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama