U.S. business inventories are up 0.2 percent in July from June, matching the 0.2 percent gain expected in the Econoday survey, after an unrevised 0.2 percent increase in June from May Business inventories are 1.5 percent higher compared to July 2024.

Business sales rise a strong 1.0 percent in July from June after a 0.7 percent increase in June and are up 4.0 percent from July in 2024.

The total business inventories/sales ratio at the end of July was 1.37 compared to 1.38 in June, and 1.40 in July 2024.

Manufacturers' inventories are up 0.3 percent on the month. Retailers' inventories are up 0.2 percent, and merchant wholesalers' inventories rise 0.1 percent.

Business inventories are expected up 0.2 percent in July from June.

Business inventories are the dollar amount of inventories held by manufacturers, wholesalers, and retailers. The level of inventories in relation to sales is an important indicator of the near-term direction of production activity.

Investors need to monitor the economy closely because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more moderate growth that won't generate inflationary pressures.

Rising inventories can be an indication of business optimism that sales will be growing in the coming months. By looking at the ratio of inventories to sales, investors can see whether production demands will expand or contract in the near future. For example, if inventory growth lags sales growth, then manufacturers will have to boost production lest commodity shortages occur. On the other hand, if unintended inventory accumulation occurs (that is, sales do not meet expectations), then production will probably have to slow while those inventories are worked down. In this manner, the business inventory data provide a valuable forward-looking tool for tracking the economy.