WASHINGTON, Aug 14 (Reuters) - U.S. business inventories were unchanged in June as an increase in stocks at wholesalers was offset by a decline at retailers, reflecting strong domestic demand in the second quarter.

The flat reading in inventories followed a 0.4% rise in May, the Commerce Department's Census Bureau said on Friday. Economists polled by Reuters had forecast inventories, a key component of gross domestic product and one of the most volatile, edging up 0.1% in June. 

Inventories increased 3.0% year-on-year in June.

Business inventories have been drawn down for five straight quarters amid robust domestic demand, a mix of consumer spending and business investment tied to artificial intelligence. 

They subtracted from gross domestic product growth in the second quarter. The economy grew at a 1.5% annualized rate last quarter, though domestic demand increased at its fastest pace in more than three years. 

Retail inventories fell 0.2% in June instead of being unchanged as estimated in an advance report last month. They surged 0.8% in May. Motor vehicle inventories rose 0.4% as previously reported. They increased 0.9% in May. 

Retail inventories excluding autos, which go into the calculation of GDP, dropped 0.4% instead of falling 0.2% as estimated last month. They gained 0.7% in May. 

Wholesale inventories rose 0.2% in June while stocks at manufacturers edged up 0.1%.

Business sales fell 1.1% in June after dropping 2.1% in the prior month. At June's sales pace, it would take 1.30 months for businesses to clear shelves, up from 1.28 months in May. The inventories/sales ratio was at 1.39 months in June 2025.