July 16, 2012 / 2:06 PM / 7 years ago

May business inventories climb 0.3 percent; sales drop

Newly assembled 2013 Ford Escapes sit on plant lots ready to be shipped out to dealers at the newly transformed Louisville Assembly Plant in Louisville, Kentucky, June 13, 2012. REUTERS/John Sommers II

WASHINGTON (Reuters) - Business inventories rose in May as motor vehicle dealers restocked to meet demand, although sales at companies edged lower for the second straight month, the Commerce Department said on Monday.

Inventories increased 0.3 percent to $1.58 trillion, after rising by an downwardly revised 0.3 percent in April.

Economists polled by Reuters had forecast inventories rising 0.2 percent in May.

Inventories in May were lifted by a 1.9 percent rise in restocking by auto dealers, in line with strong demand for motor vehicles from households earlier this year.

Inventories are a key component of gross domestic product changes. Retail inventories outside of autos - a measure which goes into the calculation of gross domestic product - rose 0.6 percent.

However, inventories at manufacturers dipped 0.2 percent in May. That was in line with recent signs of weakness at American factories.

Business sales edged 0.1 percent lower to $1.25 trillion in May, matching the prior month’s decline. At May’s pace of sales, it would take 1.27 months for businesses to clear shelves, the highest in a year and up from a 1.26-month pace in April.

Reporting by Jason Lange; Editing by Andrea Ricci

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