Business inventories are expected to have shown a solid gain in July, providing evidence that companies remain optimistic enough about the economy to keep restocking their store shelves.
Economists surveyed by Thomson Reuters are looking for inventories to post a 0.5 percent increase in July following a 0.3 percent gain in June. The Commerce Department will release the report at 10 a.m. EDT Tuesday.
The government reported last week that inventories at the wholesale level rose 1.3 percent in July, the best showing in two years. The new report will cover not only wholesale inventories but also inventories held by manufacturers and retailers.
Business restocking of empty store shelves has been a major driver of the economy since late last year. A solid gain in July should help alleviate fears that a slowdown in activity could be a warning that the country is about to slip into another recession.
The overall economy, as measured by the gross domestic product, slowed to growth of just 1.6 percent in the April-to-June quarter, down from GDP growth of 3.7 percent in the first quarter.
U.S. businesses have helped spur the current recovery by rebuilding inventories that they had slashed during the recession.
The inventory rebuilding has boosted orders to U.S. factories and helped provide support for overall economic growth.
An increase in inventories in July would mark the seventh consecutive monthly gain.