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US wholesale inventories rise more than expected
[WASHINGTON] US wholesale inventories rose at their fastest pace in six months in May, reinforcing the view that economic growth should rebound in the second quarter after a weak first three months of the year.
The Commerce Department said on Friday wholesale inventories increased 0.8 per cent from a month earlier, more than the 0.3 per cent gain forecast by economists polled by Reuters.
The biggest gains were seen in petroleum products, computer equipment and drugs.
Inventories are a key component of gross domestic product changes. The component that goes into the calculation of GDP - wholesale stocks excluding autos - rose 0.8 per cent, suggesting inventories will provide a boost to growth in the second quarter.
The economy contracted at a 0.2 per cent annual pace in the first quarter and growth got off to a slow start in the second quarter, in part because of the lingering effects of a strong dollar and spending cuts in the energy sector.
But data since then, including in job growth, suggest the economy is picking up steam.
Sales at wholesalers rose 0.3 per cent in May, a slowdown from their big surge in April and less than the 0.6 per cent increase expected by economists. Petroleum sales increased 4.3 per cent in May, down from a revised 5.9 per cent rise the prior month.
At May's sales pace it would take 1.29 months to clear shelves, the same as in April.