Washington, DC, July 9--Wholesale inventories ballooned in May as stockpiles of durable goods racked up the biggest gain in over four years.
Wholesale inventories rose 1.2% to a seasonally adjusted $305.51 billion, the Commerce Department said Friday, from a revised 0.2% increase in April. May's sharp rise was more than double the 0.5% economists had expected.
Wholesale sales rose 0.5% to a seasonally adjusted $270.40 billion, after a revised 0.9% gain in April.
The inventory-to-sales ratio edged up to 1.13 in May from April's record low of 1.12. The ratio measures how many months it would take for a firm to exhaust its current inventory. It has dropped steadily during the last year; in May 2003, the gauge stood at 1.24.
Wholesale inventories rose 5.6% from a year earlier, while sales were up a whopping 16.1%.
While companies have been steadily boosting inventories amid an expanding economy, surging demand has, in turn, cleared shelves. Analysts expect firms to keep ramping up inventories this year to keep up with increasing demand.
Inventories of durable goods such as cars and appliances jumped 1.5%, the biggest increase since November 1999, while sales edged up 0.1%. The sharp rise was led by big jumps in stockpiles of metals, lumber, hardware and autos. Lumber inventories rose 6.4%, followed closely by a 5.6% rise in inventories of metals. Hardware inventories rose 2.3% and inventories of autos rose 1.1%.
Inventories of nondurable items such as food and clothing rose 0.6%, while sales rose 0.9%. Within that category, inventories of miscellaneous nondurable goods rose by 1.9% and petroleum inventories rose 1.7%. Drug stocks rose 1.6%. Inventories of farm products fell by 3.4%.
