U.S. Business Sales Drop 1.1% in June as Inventories Hold Steady

U.S. business sales fell 1.1% in June to a seasonally adjusted $2.1113 trillion, while inventories were virtually unchanged at $2.7402 trillion, according to the Census Bureau’s Manufacturing and Trade Inventories and Sales report released Friday. The sales decline reversed part of May’s gain and came as wholesale activity weakened sharply, adding another soft data point to a day that also brought a weaker July retail-sales reading.

The June report combines manufacturers’ shipments with wholesale and retail sales, giving a broad snapshot of goods moving through the U.S. economy. Census said total business sales were still 10.0% above their June 2025 level, while inventories were 3.0% higher than a year earlier. That gap helps explain why the inventory-to-sales ratio remained below where it stood a year ago even after edging up in June.

Census released the report at 10:00 a.m. ET on August 14. The estimates are adjusted for seasonal and trading-day differences but not for price changes, so the dollar values can be influenced by shifts in prices as well as changes in physical volumes.

Wholesale sales account for most of the June decline

The weakness was not evenly distributed across manufacturers, retailers and wholesalers. Merchant-wholesaler sales dropped 3.0% from May to $794.1 billion, while manufacturers’ shipments slipped 0.2% to $652.1 billion. Retail sales in the business-inventories report rose 0.2% to $665.1 billion.

Wholesale inventories moved in the opposite direction from sales, rising 0.2% to $944.7 billion. Manufacturers’ inventories increased 0.1% to $962.9 billion, while retail inventories fell 0.2% to $832.6 billion. Taken together, those moves left total business inventories essentially flat from May.

The wholesale component is important because a sharp drop in sales alongside rising inventories can lift the amount of stock held relative to current demand. The merchant-wholesaler inventory-to-sales ratio increased to 1.19 in June from 1.15 in May, according to Census data. Manufacturers’ ratio rose to 1.48 from 1.47, while the retail ratio eased to 1.25 from 1.26.

The broader business inventory-to-sales ratio rose to 1.30 months from 1.28 in May. That means businesses collectively held inventories equivalent to roughly 1.30 months of sales at June’s pace. The ratio was still below 1.39 in June 2025, a sign that inventories have not broadly piled up relative to sales on a year-over-year basis.

Flat inventories limit the signal from weaker sales

The headline combination of falling sales and flat inventories can be read as a cooling in business turnover, but the report does not show a broad inventory overhang. Census said the monthly change in total inventories was statistically indistinguishable from zero, and the year-over-year increase in inventories was much slower than the 10.0% rise in sales.

That distinction matters for economic growth. Businesses often adjust production and orders when inventories rise faster than sales, because excess stock can reduce the need for new output. In June, however, the aggregate stock level barely changed, and the lower year-over-year inventory-to-sales ratio suggests that firms were still carrying less inventory relative to sales than a year earlier.

The June figures also fit with the second-quarter GDP picture released by the Bureau of Economic Analysis in late July. Real GDP grew at a 1.5% annualized rate in the second quarter, down from 2.1% in the first quarter. BEA said private inventory investment decreased during the quarter, with wholesale trade making the largest contribution to that decline.

At the same time, domestic demand was not uniformly weak. BEA reported that real final sales to private domestic purchasers, a measure combining consumer spending and fixed business investment, increased at a 3.9% annualized rate in the second quarter. That means the inventory data should be viewed as one part of a mixed economic picture rather than evidence by itself of a broad business contraction.

The composition of June manufacturing data tells a similar story. Census reported earlier this month that manufacturers’ shipments fell 0.2% in June after six consecutive monthly increases, while manufacturers’ inventories rose 0.1%. New factory orders also fell 0.3%, though unfilled orders continued to rise. Those figures point to some loss of momentum in goods production and distribution without showing a collapse in underlying demand.

Friday’s data add to signs of softer momentum

The business-sales report arrived less than two hours after Census reported that July retail and food-services sales fell 0.6% from June. The two reports cover different months and measure different concepts, so they should not be treated as a single synchronized reading. Still, both releases point to weaker turnover in parts of the economy as the third quarter gets underway.

The timing difference is especially important. Friday’s business-sales report describes activity in June and incorporates manufacturing, wholesale and retail data for that month. The retail-sales release describes July consumer purchases at retailers and food-service establishments. A soft June business-sales number followed by weaker July retail sales may suggest slower momentum, but it does not establish a continuous decline across the entire economy.

For investors, the inventory side of the June report may be as important as the sales decline. A large build in unsold goods can create pressure on production, margins and future orders. That is not what the aggregate data showed in June. Instead, inventories were nearly unchanged, and the total inventory-to-sales ratio remained substantially below its year-earlier level.

The next revision to the broader growth picture is due August 26, when BEA is scheduled to publish its second estimate of second-quarter GDP. Census is scheduled to release July Manufacturing and Trade Inventories and Sales on September 16. Those reports will show whether June’s sales drop was a temporary reversal after May’s increase or part of a more persistent cooling in business activity.