July wholesale inventories jump 1.3 percent

Wholesale inventories surged by the largest amount in two years in July, a government report said on Friday, in a sign firms were anticipating enough demand to boost stock this summer.

Inventories jumped 1.3 percent, the steepest gain since July 2008, and more than three times the 0.4 percent increase analysts had anticipated, a Commerce Department report showed.

Inventories are a key component of gross domestic product changes over a business cycle, and the rebuilding of merchandise stock from record low levels has been a key driver of the economy's recovery from the worst recession since the 1930s.

Economic data suggest the recovery may have lost steam over the summer. However, Friday's report showed wholesale sales rose by a larger-than-expected 0.6 percent in July, suggesting that concerns inventories might be sitting on shelves gathering dust may not be justified.

The inventory-to-sales ratio, which measures how long it would take to clear shelves at the current sales pace, edged up to 1.16 months' worth. It was the highest since February, but was down from 1.27 months' worth a year ago.