US Wholesale Inventories Pile Up in May by 0.8%
Friday saw the US wholesale inventories rise to as much as 0.8% in May, from what they were a month ago. This is being seen as the largest rise in the last six months, which has raised hopes of seeing a possible growth turnaround in the remaining quarters.
The growth in the first three months (January-March quarter) of the year has been slack, caused majorly by harsh weather. Sales were up 0.3 percent in May following a 1.7 percent surge in April. This May increase was lower than the economists' expectations of a 0.6 percent increase. The government also reported that retail sales accelerated solidly in May. Even petroleum sales increased 4.3 percent in May, a fall from a revised 5.9 percent rise a month ago.
Now, the inventories, which are a key component of gross domestic product, have seen a 0.8 percent surge. This suggests that these increased inventories will provide a boost to growth in the second quarter. Even a pickup in consumer spending, that contributes around 70 percent to the economic activity, is expected to aid stronger economic growth for the remaining part of the year. In addition to this, data on job growth too implies that the economy is picking up steam.
As for the inventories, the biggest gains were seen in petroleum products, computer equipment and drugs. Larger stockpiles of autos and auto parts as well as furniture, lumber and computers, also added to the inventory buildup. At May's levels, it would take some 1.29 months to clear these inventories from the shelves. Analysts expect this pickup to translate into GDP growth of 2.5 percent in the second quarter.
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