WASHINGTON - U.S. wholesale inventories recorded their largest increase in 10 months in April as stocks of machinery and farm products rose, suggesting inventories could be a boost to economic growth in the second quarter.
The Commerce Department said on Thursday that wholesale inventories increased 0.6 percent. Inventories for March were revised up to show a 0.2 percent gain instead of the previously reported 0.1 percent rise.
Economists polled by Reuters had forecast wholesale inventories nudging up 0.1 percent in April.
Sales at wholesalers jumped 1.0 percent in April after advancing 0.6 percent in March. With sales increasing solidly for a second straight month, it would take wholesalers 1.35 months to clear shelves, down from 1.36 months in March.
Inventories are a key component of gross domestic product changes. The component of wholesale inventories that goes into the calculation of GDP - wholesale stocks excluding autos - increased 0.8 percent in April.
Inventories have been a drag on GDP growth since the third quarter of 2015. Businesses accumulated record inventory in the first half of 2015, which outstripped demand. Though the pace of accumulation slowed, inventories remained high in the second half of 2015 and the first quarter of 2016.
Reporting by Lucia Mutikani; Editing by Paul Simao