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US business inventories log big gain in April, may boost growth

Employee organizes treated lumber at Maze Lumber in Peru, Illinois.
Daniel Acker | Bloomberg | Getty Images
Employee organizes treated lumber at Maze Lumber in Peru, Illinois.

U.S. business inventories recorded their biggest increase in six months in April and picked up excluding automobiles, supporting expectations of a sharp rebound in growth in the second quarter.

The Commerce Department said on Thursday inventories increased 0.6 percent in April after rising 0.4 percent in March. The increase in April was the largest since October. Economists polled by Reuters had expected inventories, which are a key component of gross domestic product changes, to rise 0.4 percent in April. Retail inventories, excluding autos, which go into the calculation of GDP, rose 0.2 percent.

Retail stocks excluding autos had edged up 0.1 percent in March. A sharp slowdown in the pace of inventory accumulation contributed to depressing growth in the first quarter.

The economy contracted at a 1.0 percent annual pace in the January-March period as inventories subtracted 1.6 percentage points from GDP. A swing in inventories is expected to help growth top a 3.0 percent pace this quarter.

In April, business sales increased 0.7 percent after rising 1.1 percent in March. At April's sales pace, it would take 1.29 months for businesses to clear shelves, unchanged from March.

--By Reuters

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