Wholesale Stocks Up Moderately As Petroleum Falls
Wholesale inventories rose less than expected in March as the value of petroleum stocks fell by the most in nearly two years, according to government data on Tuesday that showed no build up of unsold goods amid steady sales.
Total wholesale inventories increased 0.3 percent to a record $480.4 billion, the Commerce Department said, after an unrevised 0.9 percent rise in February.
Economists polled by Reuters had expected stocks of unsold goods at U.S. wholesalers to rise 0.6 percent in March.
Inventories are a key component of gross domestic product changes and March's modest increase could have implications for revisions to the first estimate for first-quarter GDP published last month.
However, much will depend on data next week on overall business inventories for March. The economy grew at a 2.2 percent annual pace in the first three months of the year, with inventories making a far smaller contribution than in the fourth quarter.
The value of petroleum stocks dropped 5.9 percent in May, the largest decline since May 2010, partly reflecting retreating crude oil prices.
Automobile inventories climbed 0.4 percent in March after declining 1 percent the prior month.
There has been a strong demand for motor vehicles, prompting manufacturers to ramp up production. Economists, however, warn manufacturers will have to scale back on production to prevent an unwanted inventory build.
In March, sales at wholesalers rose 0.5 percent after rising 1.1 percent in February. Economists had expected sales to increase 0.7 percent in March.
Sales at wholesalers in March were mixed, with automobiles falling 1.7 percent, the largest drop since May last year. Petroleum sales increased 2.7 percent after rising 4.4 percent in February.
At March's sales pace it will take 1.17 months to clear shelves, unchanged for the sixth straight month.