RTTNews - Business inventories fell by more than expected in the month of June, according to a report released by the Commerce Department on Thursday, although the report also showed a notable increase in business sales during the month.

The report showed that business inventories fell 1.1 percent in June followed a revised 1.2 percent decrease in May. Economists had been expecting inventories to fall by 0.9 percent compared to the 1.0 percent decrease originally reported for the previous month.

With the continued decrease, business inventories in the month of June were down 9.8 percent compared to the same month a year ago.

A 1.7 percent decrease in merchant wholesalers' inventories contributed to the bigger than expected monthly drop in business inventories, with inventories at retailers and manufacturers also falling by 1.0 percent and 0.8 percent, respectively.

At the same time, the Commerce Department said that business sales rose 0.9 percent in June after coming in unchanged in May. Nonetheless, business sales were still down 18.0 percent compared to the same month a year ago.

The monthly increase in business sales was partly due to a 1.4 percent increase in sales by manufacturers. Sales by retailers and merchant wholesales also rose by 0.9 percent and 0.4 percent, respectively.

With inventories falling and sales rising, the total business inventories/sales ratio fell to 1.38 in June from 1.41 in July. The ratio fell to its lowest level since October of 2008, but it remains well above 1.26 in June of 2008.

Peter Boockvar, equity strategist for Miller Tabak, said, Today's June data is old news, but it captures how Q2 ended and it will result in a revision lower to the Q2 GDP number, partially offset by a lower than expected June trade figure.

The Commerce Department released a report on Wednesday showing that the U.S. trade deficit widened in the month of June compared to the previous month, although the deficit for the month still came in narrower than economists had been anticipating.

With imports increasing at a faster pace than exports, the report showed that the trade deficit widened to $27.0 billion in June from $26.0 billion in May. Economists had been expecting a somewhat more significant increase in the size of the deficit to $28.7 billion.

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