Australian businesses sharply ran down their stockpiles in the June quarter producing a shock drop in inventories that may have sent the economy backwards.

According to data released by the Australian Bureau of Statistics (ABS) on Monday, non-farm inventories fell by 0.9 per cent in the three months to the end June after seasonal adjustments.

A sharp decline in business stockpiles has created further downside risks for Australia's June quarter GDP report. Credit:Cole Wilson

The result was in stark contrast to economists' forecasts that predicted an increase of 0.3 per cent.

The significant decline in stockpiles is expected to slash 0.6 percentage points off quarterly gross domestic product (GDP) for the June quarter, increasing the risk of a weak or even negative figure when the data is released on Wednesday.