Wholesale stockpiles rose 0.8% in July

Wholesale businesses boosted their stockpiles in July for the 19th consecutive month, but their sales were flat. Faltering demand could force businesses to cut back on orders when the economy is at risk of another recession. The Commerce Department says wholesale inventories rose 0.8% in July. Sales were unchanged, the poorest showing since a 0.3% drop in May. Weakening sales could shake business confidence and cause company managers to cut back on their restocking. Still, economists say sales will likely rebound in coming months as the economy mounts a modest recovery from extremely weak growth in the first half of this year. In July, the ratio of inventories to sales increased slightly to 1.17 from 1.16 in June. That means it would take 1.17 months to exhaust the current level of stockpiles. That ratio is very close to the record low of 1.13 hit in March. Leaner stockpiles typically suggest wholesalers will boost factory orders in the months ahead. But that decision is largely dependent on sales. The economy expanded at an annual rate of just 0.7% in the first six months of the year, the slowest growth since the recession officially ended two years ago. Employers did not add any net new jobs in August. Slower growth and curtailed hiring have raised concerns that the economy could fall back into a recession.