Wholesalers Rebuild Inventories as Demand Holds Up

U.S. wholesalers kept restocking their shelves in August, a sign that demand is holding up even as tariff uncertainty clouds the outlook. Wholesale inventories rose a revised 0.5% in August, after surging 1.4% in July, the Commerce Department said, according to Reuters. The August gain was revised down from an initially reported 0.7%.

Inventories are the goods companies keep on hand before they reach stores, and rising stockpiles usually mean businesses expect customers to keep buying.

The details were mixed. Inventories of durable goods, which are long-lasting items like machinery and appliances, rose 0.8%. Nondurable goods were flat overall, with petroleum stocks falling 3.9%.

Sales gave the clearest signal of strength. Wholesaler sales accelerated 1.8% in August. At that sales pace, it would take 1.18 months to clear the shelves, a steady ratio that suggests stock levels are matched to demand rather than piling up.

The artificial intelligence boom showed up in the trade figures. Imports of capital goods, the equipment businesses buy to expand, hit a record high in August, indicating that spending on technology and machinery stayed robust.

There is a catch for the broader growth picture. Economists estimate that trade could subtract as much as 2.5 percentage points from third-quarter GDP, because the GDP measure counts only domestic production and the import surge offsets it. Even so, estimates for third-quarter growth sit around 3.0%, suggesting the economy is still expanding at a solid clip.

The bottom line is that wholesalers are betting on continued demand. If sales keep pace with inventories, the restocking trend points to a healthy business cycle rather than a warehouse glut.