US wholesale inventories rise in May

US WHOLESALE inventories increased solidly in May, likely putting inventory investment on track to support economic growth in the second quarter.

The Commerce Department’s Census Bureau said on Wednesday (Jul 10) that wholesale inventories rose 0.6 per cent, as previously estimated last month. Stocks at wholesalers rose 0.2 per cent in April.

Economists polled by Reuters had expected that inventories, a key part of gross domestic product, would be unrevised. Inventories fell 0.5 per cent on a year-on-year basis in May.

Private inventory investment has been a drag on GDP for two straight quarters as businesses carefully managed stocks and domestic demand remained strong.

There is cautious optimism that inventory accumulation could offset some of the anticipated hit on GDP from a widening trade deficit. Growth estimates for the second quarter are around a 2 per cent annualized rate. The economy grew at a 1.4 per cent pace in the January-March quarter.

Wholesale motor vehicle inventories rose 1.4 per cent in May. Excluding autos, wholesale inventories rose 0.5 per cent. This component goes into the calculation of GDP.

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Sales at wholesalers rose 0.4 per cent in May after rising 0.2 per cent in April. At May’s sales pace it would take wholesalers 1.35 months to clear shelves, the same as in April. REUTERS