U.S. business inventories rise 0.1% in May

08:41, July 15, 2010      

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Inventories held by U.S. businesses on shelves and backlots edged up 0.1 percent in May, as sales dropped for the first time in more than a year, the Commerce Department said Wednesday.

The 0.1-percent increase, the fifth consecutive monthly gain, was slightly weaker than the 0.2-percent gain economists had expected.

According to data released by the department, total business sales dropped 0.9 percent in May, the first decline since March 2009.

The total business inventories-to-sales ratio at the end of May edged up slightly to 1.24 from 1.23 in April. The ratio is a measure of how long it would take to deplete stocks at the current sales pace.

Usually, adding inventories are seen as a sign of increase of confidence in future demand. Analysts look at the inventories-to-sales ratio to determine how to interpret the data.

U.S. economic growth slowed to 2.7 percent in the first three months of this year, in part because the pace of inventory re-building slowed. Many economists believe growth will slow to around 2.5 percent in the second half of this year.



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