US business inventories rise strongly; sales slow

US BUSINESS inventories increased strongly in April amid a moderation in sales, government data showed on Wednesday (Jun 15).

Business inventories rose 1.2 per cent after advancing 2.4 per cent in March, the Commerce Department said. Inventories are a key component of gross domestic product. April's increase was in line with economists' expectations. Inventories advanced 16.6 per cent on a year-on-year basis in April.

Retail inventories increased 0.7 per cent in April as estimated in an advance report published last month. That followed a 3.1 per cent jump in March. Motor vehicle inventories dropped 2.2 per cent as estimated last month. They increased 1.7 per cent in March.

Retail inventories excluding autos, which go into the calculation of GDP, advanced 1.7 per cent as estimated last month.

Inventories are being closely watched amid rising fears of a recession next year as the Federal Reserve raises interest rates to cool demand in its battle against high inflation. Major US retailers, including Walmart and Target, said last month that they were carrying too much merchandise.

Wholesale inventories increased 2.2 per cent in April. Stocks at manufacturers gained 0.6 per cent.

Business sales rose 0.4 per cent in April after accelerating 1.6 per cent in March. At April's sales pace, it would take 1.29 months for businesses to clear shelves, up from 1.28 months in March. REUTERS