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Wholesale inventories gain in May, helping to feed growth optimism

An employee operates a forklift at the distribution center of the Oregon Freeze Dry Inc. facility in Tangent, Oregon.
Leah Nash | Bloomberg | Getty Images
An employee operates a forklift at the distribution center of the Oregon Freeze Dry Inc. facility in Tangent, Oregon.

U.S. wholesale inventories rose in May, reinforcing the view that economic growth should surge in the second quarter following a weak first three months of the year.

The Commerce Department said on Thursday wholesale inventories increased 0.5 percent from a month earlier. The rise was just below economists' expectations for a 0.6 percent gain.

The gains were driven by increases in inventories of metals, autos, machinery and lumber.

Inventories are a key component of gross domestic product changes. The component that goes into the calculation of GDP - wholesale stocks excluding autos - increased 0.3 percent in May.

A sharp slowdown in the pace of restocking by businesses helped to sink economic growth in the first quarter, but a swing in inventories is expected in the April-June period.

The economy contracted at a 2.9 percent annual pace in the January-March period, with inventories playing a big role in the decline. Many analysts forecast growth in the second quarter to rebound to around a 3 percent pace.

Sales at wholesalers increased 0.7 percent in May. At May's sales pace it would take 1.18 months to clear shelves, which was unchanged from April.

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