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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.

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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.


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