U.S. wholesale inventories revised lower in May

U.S. wholesale inventories increased less than initially thought in May, suggesting that inventory investment could subtract from gross domestic product in the second quarter.

The Commerce Department said on Friday that wholesale inventories rose 1.8%, instead of 2.0% as reported last month. Stocks at wholesalers advanced 2.3% in April.

Economists polled by Reuters had expected May inventories would be unrevised. Wholesale inventories increased 24.7% in May on a year-on-year basis.

Inventories are a key part of gross domestic product.

Wholesale motor vehicle inventories gained 1.8% after rising 2.2% in April. Wholesale inventories, excluding autos, increased 1.8% in May. This component goes into the calculation of GDP.

Business inventories increased at a strong clip in the first quarter as consumer spending slowed. The excess inventory means businesses have little appetite to continue restocking, which could weigh on GDP in the second quarter.

Second-quarter GDP estimates range from as low as a 1.9% annualized rate of decline to as high as a 1.0% pace of growth. The economy contracted at a 1.6% rate in the first quarter because of a record trade deficit.

Sales at wholesalers rose 0.5% in May after increasing 0.8% in April. At May’s sales pace it would take wholesalers 1.26 months to clear shelves, up from 1.25 months in April.