Business inventories barely rise in May

WASHINGTON Mon Jul 15, 2013 10:04am EDT

Conveyors are seen at a Wal-Mart Stores Inc distribution centers in Bentonville, Arkansas June 6, 2013. The annual shareholders meeting for Walmart takes place on June 7. REUTERS/Rick Wilking

Conveyors are seen at a Wal-Mart Stores Inc distribution centers in Bentonville, Arkansas June 6, 2013. The annual shareholders meeting for Walmart takes place on June 7.

Credit: Reuters/Rick Wilking

WASHINGTON (Reuters) - Business inventories rose marginally in May as sales rebounded, adding to a raft of data that have pointed to a sharp slowdown in economic growth in the second quarter.

The Commerce Department said on Monday inventories edged up 0.1 percent after rising by a revised 0.2 percent in April.

Economists polled by Reuters had forecast inventories unchanged in May after a previously reported 0.3 percent gain.

Inventories are a key component of gross domestic product changes. Retail inventories, excluding autos - which go into the calculation of GDP - increased 0.3 percent after rising by the same margin in April.

Business are being cautious about restocking against the backdrop of lackluster domestic demand. The report suggested inventories will be less of a boost to GDP this quarter.

The business inventories report comes in the wake of data this month showing a sharp widening in the trade deficit, which prompted economists to slash their second-quarter GDP estimates.

Inventories added more than half a percentage point to first-quarter GDP growth, which advanced at a 1.8 percent annual rate. Estimates for growth in the April-June period currently range as low as a 0.5 percent pace.

Business sales increased 1.1 percent in May after being flat the prior month. At May's sales pace, it would take 1.29 months for businesses to clear shelves, down from 1.30 months in April.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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