U.S. trade output is up, but slowing.

Warehouse workers handle inventory piled up to the ceiling at the ABT Electronics facility in Glenview, Illinois, USA on December 4, 2018. REUTERS/Richa Naidu

WASHINGTON, Sept 15 (Reuters) – U.S. commercial output rose in July, but the pace was much slower than in previous months, perhaps due to a slowdown in demand amid higher interest rates, forcing companies to exercise caution.

Business inventories rose 0.6% after rising 1.4% in June, the Commerce Department said on Thursday. Inventories are a major component of GDP. July’s increase was in line with economists’ expectations.

Inventories rose 18.4% year over year in July.

Retail sales rose 1.2 percent in July, according to estimates from the preliminary report published last month. It followed a 2.0% increase in June.

Motor vehicle inventories ran 3.5% last month. They rose 3.3% in June.

Excluding automobiles in the gross domestic product calculation, retail goods rose an estimated 0.4 percent last month.

Compared to the faster pace in the January-March quarter, the pace of inventories slowed significantly in the second quarter, weighed against last quarter’s GDP. The economy contracted at an annualized rate of 0.6% in the second quarter, after slowing by 1.6% in the January-March period.

In July, wholesale goods increased 0.6%. Producers’ shares gained 0.1%.

Business sales fell 0.9% after rising 1.2% in June. At July’s sales pace, businesses took 1.32 months to clear shelves, up from 1.30 in June.

Reporting by Lucia Mutikani; Editing by Andrea Ricci

Our Standards: The Thomson Reuters Trust Principles.