RTTNews - Wholesale inventories fell by much more than expected in the month of June, according to a report released by the Commerce Department on Tuesday, although the report also showed a modest increase in wholesale sales.

The report showed that wholesale inventories fell 1.7 percent in June following a revised 1.2 percent decrease in May. Economists had expected inventories to fall 0.9 percent compared to the 0.8 percent drop originally reported for the previous month.

Peter Boockvar, equity strategist for Miller Tabak, noted, While the inventory [data] is somewhat old news, it gives us a snapshot of how the quarter ended and further quantifies the extent of the inventory contraction.

It also should follow that the greater than expected drag in Q2 should lead to much less of one in Q3, Boockvar added.

Inventories of durable goods fell by 1.5 percent in June after falling by 1.8 percent in May, while inventories of non-durable goods decreased by 2.0 percent after edging down 0.2 percent in the previous month.

At the same time, the report also showed that wholesale sales increased by 0.4 percent in June, matching the increase seen in the previous month. Nonetheless, wholesale sales are down 21.0 percent compared to the same month a year ago.

While sales of durable goods increased by 0.7 percent in June after slipping by 0.2 percent in May, sales of non-durable goods edged up by 0.1 percent following a 0.9 percent increase in the previous month.

With inventories falling and sales rising, the wholesale inventories/sales ratio edged down to 1.26 in June from 1.28 in May. The ratio came in at 1.11 in June of 2008.

Thursday morning, the Commerce Department is due to release its report on total business inventories in the month of June. The report is expected to show that inventories fell by 0.9 percent in June following a 1.0 percent decrease in May.

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