WASHINGTON (Reuters) - Business inventories rose more than expected in May as sales recorded their first decline in almost a year, a government report showed on Thursday.
The Commerce Department said inventories increased 1.0 percent to $1.51 trillion, the highest level since October 2008, after rising by an upwardly revised 1.0 percent in April.
Economists polled by Reuters had forecast inventories rising 0.8 percent after a previously reported 0.8 percent increase in April.
Inventories are a key component of gross domestic product changes and May’s rise suggested restocking would give second-quarter GDP growth a lift.
But the increase, which came as business sales dipped 0.1 percent - the biggest fall since last June -- was also confirmation of the sluggish demand that is helping to constrain growth. Sales edged up 0.1 percent in April.
May’s weak sales pace raised the inventory-to-sales-ratio -- which measures how long it would take to clear shelves at the current sales pace - to 1.28 months from 1.27 months in April.
Reporting by Lucia Mutikani, Editing by Chizu Nomiyama