Ahead of the Bell: US wholesale inventories

US wholesale inventories likely rose 0.3 percent in June

Associated Press
US wholesale stockpiles in June show largest gain in year
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In this Saturday, June 6, 2015 photo, Maria Cantellano, left, talks with a customer while looking over crates of watermelons at her stand at the Atlanta Farmers Market Saturday, in Atlanta. The Commerce Department releases wholesale trade inventories for June on Tuesday, Aug. 11, 2015. (AP Photo/David Goldman)

WASHINGTON (AP) -- The Commerce Department releases its June report on wholesale stockpiles at 10 a.m. Eastern Tuesday.

STOCKPILES INCREASE: Economists expect that stockpiles held by U.S. wholesalers rose 0.4 percent in June, according to a survey of economics by data firm FactSet.

INVENTORIES AND SALES: Stockpiles increased 0.8 percent in May, as sales rose 0.3 percent. Yet falling oil prices and limited consumer spending have caused the dollar value of wholesale inventories in May to be 3.8 percent lower than a year ago.

Still, many economists expect stockpile levels to rebound as consumer demand improves and the precipitous drop in oil prices, which began in the middle of last year, has settled at slightly less than $50 a barrel.

An increase in inventories and sales would point to faster economic growth, since consumers account for 70 percent of all economic activity.

The U.S. economy has endured a sluggish, six-year recovery from the Great Recession. During the first half to 2015, the economy grew at a modest annual rate of 1.5 percent, slightly less than the 2 percent average during the previous five years.

Growth was waylaid at the start of 2015 by winter storms, a strong dollar that hurt exports, and lower oil prices that forced energy firms to cut orders for equipment, machinery and pipelines.

Economists say that growth should accelerate through the end of the year. But these forecasts depend on a strong job market boosting consumer spending. Last week, the government reported that payrolls increased a solid 215,000 in July and job growth for the prior two months was revised up by a net 14,000. The steady gains suggest that employers expect the economy to continue expanding.

The solid job growth has led many analysts to say that the Federal Reserve will begin raising a key interest rate as early as September, the first increase in nearly a decade.

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