Business Inventories, or Manufacturing and Trade Sales and Inventories, show a 0.4% increase in sales and an 0.3% increase in inventories for June 2011. Earlier, wholesale inventories, about a third of all inventories, reported earlier, also showed a 0.6% increase for June.

Below is the monthly percent change for business inventories.

This report includes:

The data that is used as input for the Manufacturing and Trade Inventories and Sales (MTIS) economic indicator release is collected by three separate surveys: the Manufacturers' Shipments, Inventories and Orders Survey (M3), the Monthly Wholesale Trade Survey (MWTS), and the Monthly Retail Trade Survey (MRTS).

This Census economic report covers Retail, Manufacturing and Wholesale inventories, which is pretty much most of the non-farm inventories the BEA uses for their change in private inventory calculations in the GDP report and national accounts.

From the Q2 GDP 2011 advance report, the change in non-farm private inventories was $80.1 billion for Q2 and $71.4 billion for Q1 2011 in nominal or not adjusted for inflation, dollars. In real dollars Q2 was $64.6 billion and Q1 was $59.7 billion for non-farm changes in private inventories. These numbers are seasonally adjusted and annualized. The change in non-farm private inventories contributed +0.19 percentage points of the 1.3% GDP reported, annualized, quarterly. Q1 2011 changes in private inventories (non-farm) was a +0.41 percentage point contribution.

The change for Q2 business inventories, using this report numbers, taking the end of quarter month numbers was $33 billion yet Q1 was $43 billion, seasonally adjusted, not annualized. The nominal percentage change of business inventories is 2.2% from Q1 to Q2, end of month values (inventories accumulate so no summation). From Q4 to Q1, the change is 3.0%. In other words, business inventories accumulated less over Q2 2011 than the previous period, Q1 2011.

The Q2 advance GDP report private inventories values were this:

The change in real private inventories added 0.18 percentage point to the second-quarter change in real GDP after adding 0.32 percentage point to the first-quarter change. Private businesses increased inventories $49.6 billion in the second quarter, following increases of $49.1 billion in the first quarter and $38.3 billion in the fourth.

Without going through all of the calculations to try to estimate real changes in all non-farm private inventories, or apply the inventory valuation adjustment, it's safe to say in the Q2 2011 GDP report revision, the change in private inventories and their corresponding GDP contribution will be revised downward.

That said, the effect should be much less than the trade deficit effects. Expect Q2 2011 GDP to be revised below 1%. While it's extremely difficult to estimate NIPA accounts with all of their various accounting methods, adjustments and internal data, if I had to place a bet at the moment, I would put my money on 0.7% Q2 GDP.