U.S. business inventories rise solidly in June

WASHINGTON, Aug 17 (Reuters) - U.S. business inventories
increased strongly in June, though raw material shortages
continue to frustrate efforts by motor vehicle retailers to
restock.

Business inventories rose 0.8% after advancing 0.6% in May,
the Commerce Department said on Tuesday. Inventories are a key
component of gross domestic product. June's increase was in line
with economists' expectations.

Inventories increased 6.6% on a year-on-year basis in June.
Retail inventories gained 0.3% in June as estimated in an
advance report published last month. That followed a 0.9% drop
in May.

Motor vehicle inventories decreased 0.3% as estimated last
month. A global semiconductor shortage is undercutting auto
production, leading to stocks being run down and holding back
retail sales.

Retail inventories excluding autos, which go into the
calculation of GDP, increased 0.5%, instead of 0.6% as estimated
last month.

Business inventories were depleted at a rapid clip in the
second quarter amid booming domestic demand fueled by massive
fiscal stimulus and the economy's reopening following
disruptions early in the COVID-19 pandemic.

The government reported last month that consumer spending
picked up in the second quarter, with outlays on goods rising
solidly, even as demand rotates back to services because of
COVID-19 vaccinations. The double-digit growth in consumer
spending last quarter helped to lift the level of GDP above its
peak in the fourth quarter of 2019.

Inventory rebuilding is expected to underpin economic growth
in the second half of the year.

Wholesale inventories increased 1.1% in June. Stocks at
manufacturers advanced 1.0%.

Business sales increased 1.4% in June after falling 0.2% in
May. At June's sales pace, it would take 1.25 months for
businesses to clear shelves, down from 1.26 months in May.
(Reporting by Lucia Mutikani)