Warehouse workers deal with inventory stacked up to the ceiling at an ABT Electronics Facility in Glenview, Illinois, U.S. December 4, 2018. Picture taken December 4, 2018./Richa Naidu/File Photo

US business inventories increased moderately in August amid strong sales growth, government data showed on Thursday.

Inventories rose 0.4% after surging 0.9% in July, the Commerce Department's Census Bureau said. The increase in inventories, a key component of gross domestic product and one of the most volatile, was in line with economists' expectations.

Inventories increased 4.6% year-on-year in August. Businesses are rebuilding inventories, which have been drawn down for five straight quarters amid robust domestic demand, mostly consumer spending and investment in AI. 

But the restocking effort is mostly reliant on imports, which are a drag on GDP growth. Economists estimate that trade could subtract as much as 2.5 percentage points from third-quarter GDP growth. But they expect restocking to offset the hit from imports.

Growth estimates for the third quarter are mostly around a 3.0% annualized rate. The economy grew at a 2.2% pace in the April-June quarter. Inventories subtracted 0.53 percentage point from GDP growth in the second quarter

Retail inventories increased 0.2% in August instead of 0.3% as estimated in an advance report last month. They rose 0.9% in July. Motor vehicle inventories climbed 0.8% as previously reported. They increased 1.0% in July.

Retail inventories excluding autos, which go into the calculation of GDP, were unchanged instead of 0.1% as estimated last month. They gained 0.8% in July. 

Wholesale inventories rose 0.5% in August while stocks at manufacturers also increased 0.5%.

Business sales shot up 1.1% in August after rising 0.5% in the prior month. At August's sales pace, it would take 1.33 months for businesses to clear shelves, down from 1.34 months in July. The inventories/sales ratio was at 1.40 months in August 2025.