Wholesale Inventories Drop 0.1%; July Jobless Claims Slip

Stocks at U.S. wholesalers fell unexpectedly in July and claims for unemployment benefits also slipped, but the two government economic reports Thursday did not take Hurricane Katrina’s full effect into account.

Inventories at U.S. wholesalers dropped 0.1%, while sales rose 0.5% on a jump in demand for oil, the Commerce Department said.

The number of Americans making initial claims for jobless aid fell 1,000 last week, the Labor Department said.

Analysts expect that number to jump when data are revised to include a surge of claims after Katrina.

The decline in wholesale stocks was the first since January 2004, the Commerce Department said.

Wall Street analysts had expected wholesale inventories to rise 0.5%, according to a Reuters poll.

Stocks of durable goods -- products meant to last three years or more -- rose 0.3% in July, as inventories of electrical equipment, machinery, cars, furniture and lumber rose.

Nondurable stocks fell 0.7% as stocks of drugs plunged 4.9% and inventories of paper, groceries, chemicals and alcohol slipped.

The inventories-to-sales ratio, a measure of how long it would take to deplete stocks at the current sales pace, dropped to 1.18 months from 1.19 in June.

The 0.5% gain in wholesale sales matched June’s advance. Sales of petroleum products by wholesalers jumped 7.6% in July, the largest gain since March.

A drop in inventories can mean that demand is outstripping wholesalers’ ability to supply. But it also could indicate that wholesalers are keeping inventories lean based on doubt about future demand.

In a separate report, the government said an upward revision of unemployment claims was expected as hurricane-stricken states on the Gulf Coast process applications.

First-time claims for unemployment insurance benefits dropped to 319,000 last week from 320,000 the previous week, the Labor Department said. This included about 10,000 disaster-related applications for aid from hurricane-battered Alabama, Louisiana and Mississippi.

Economists surveyed by Reuters had expected claims to fall 5,000 to 315,000 last week.

A four-week moving average of claims, seen by many economists as a better guide to the employment situation because it smooths weekly volatility, rose for the fourth straight week, climbing to 318,500 from 316,500.