US Business Inventories Up, but Sales Are Weak

Manufacturing warehouse inventory
Tim Boyle | Bloomberg | Getty Images

U.S. business inventories rose in April, but with goods taking longer to sell businesses could slow their pace of stock accumulation to prevent an unwanted piling up of merchandise.

The Commerce Department said on Thursday inventories increased 0.3 percent after edging down 0.1 percent in March. The rise was in line with economists' expectations.

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Inventories are a key component of gross domestic product changes. Retail inventories, excluding autos — which go into the calculation of gross domestic product — rebounded 0.4 percent. That followed a 0.7 percent fall in March.

Inventories added more than half a percentage point to first-quarter GDP growth, which advanced at a 2.4 percent annual rate. Estimates for growth in the April-June period currently range below a 2.0 percent pace.

Business sales fell 0.1 percent in April after declining 1.2 percent the prior month. At April's weak sales pace, it would take 1.31 months for businesses to clear shelves.

That was the highest inventories to sales ratio since October 2009 and was up from 1.30 months in March.