US business inventories rise solidly

WASHINGTON. US business inventory accumulation increased solidly in August, though motor vehicle retailers continued to struggle to restock amid an ongoing global semiconductor shortage, which is forcing automobile manufacturers to cut production.

Business inventories rose 0.6 per cent after a similar gain in July, the Commerce Department said yesterday. Inventories are a key component of gross domestic product. August’s increase was in line with economists’ expectations. Inventories increased 7.4 per cent on a year-on-year basis in August. Retail inventories gained 0.1 per cent in August as estimated in an advance report published last month. That followed a 0.4 per cent rise in July. Motor vehicle inventories dropped 1.4 per cent instead of 1.5 per cent as estimated last month.

Business inventories were depleted in the first half of the year, but shortages amid persistent supply bottlenecks because of the Covid-19 pandemic and congestion at ports in the US and China are making it difficult to rebuild stocks.