US business inventories rise as expected in June

WASHINGTON, Aug 15 (Reuters) - U.S. business inventories increased as expected in June, lifted by higher motor vehicle stocks.

Inventories rose 0.2% after being unchanged in May, the Commerce Department's Census Bureau said on Friday. Inventories are a key component of gross domestic product and one of the most volatile. They increased 1.6% year on year.

Inventories decreased at a $26.0 billion annualized rate in the second quarter, subtracting 3.17 percentage points from GDP growth. The drag was more than offset by a smaller trade deficit as a tariff-related flood of imports subsided.

The economy grew at a 3.0% rate last quarter after contracting at a 0.5% pace in the January-March quarter.

Retail inventories increased 0.2%, instead of 0.3% as estimated in an advance report published last month. They increased 0.2% in May.

Motor vehicle inventories advanced 1.0%, rather than 0.9% as previously reported. They rose 0.6% in May. Retail inventories excluding autos, which go into the calculation of GDP, dipped 0.1% instead of being unchanged as initially reported.

Wholesale inventories edged up 0.1% in June, while stocks at manufacturers rose 0.2%.

Business sales rebounded 0.5% in June after falling 0.4% in May. At June's sales pace, it would take 1.38 months for businesses to clear shelves, down from 1.39 months in May.