Inventories at U.S. Companies Climbed in May as Sales Dropped
Posted By Admin on July 19, 2011
Inventories at US companies climbed
more than forecast in May as sales dropped for the first time in
almost a year, a sign orders to factories may slow.
The 1 percent increase in stockpiles compared with a 0.9
percent gain forecast in a Bloomberg News survey and followed a
revised 1 percent increase in April that was larger than
initially estimated, Commerce Department figures showed today in
Washington. Sales decreased 0.1 percent in May, the weakest
reading since June 2010.
At the current sales pace, businesses had enough goods on
hand to last 1.28 months, up from 1.27 months in April and the
most this year. While rising stockpiles may mean supply-chain
constraints from Japan’s earthquake are dissipating, slowing
demand points to continued efforts by businesses to keep
inventories lean.
“Companies are reluctant to ramp up production for fear
consumers could shift down,” Sal Guatieri, a senior economist at
BMO Capital Markets in Toronto, said before the report.
The median projection was based on a survey of 46
economists. Estimates ranged from increases of 0.3 percent to 1.5
percent. The April reading was revised from a previously reported
0.8 percent increase.
Other reports today showed retail sales stagnated, while
claims for jobless benefits and producer prices fell.
Sales Stagnate
The 0.1 percent increase in retail purchases for June
followed a 0.1 percent drop the prior month, Commerce Department
figures showed. Excluding auto sales, purchases were little
changed, the weakest performance since July 2010.
The number of Americans filing applications for unemployment
benefits dropped last week to the lowest level since April,
reflecting fewer-then-typical dismissals in the auto industry
during the summer retooling period at auto makers, Labor
Department data showed.
Wholesale costs dropped 0.4 percent last month, more
than forecast and restrained by the biggest decrease in
energy prices in two years, the Labor Department also reported.
Retailers’ inventories, the only part of today’s stockpile
report not previously released, rose 0.4 percent in May as sales
decreased 0.2 percent.
Factory inventories, which comprise about 38 percent of the
total, grew 0.8 percent in May, while wholesale inventories,
which account for about 30 percent of the total, gained 1.8
percent, the Commerce Department said earlier this month.
Inventory Contribution
Inventory rebuilding, a major driver of the early stages of
the economic recovery in 2009, sped up in the first quarter,
contributing 1.3 percentage points to gross domestic product,
according to Commerce Department data. It subtracted 3.4
percentage points from growth in the fourth quarter of 2010.
Auto dealer inventories climbed 0.7 percent while car sales
dropped 1.8 percent. Auto sales fell to an annual rate of 11.76
million units in May from 13.14 in April. They fell again to
11.41 million in June, as potential buyers held off on fears
dealerships would jack up prices due to low supply.
Toyota Motor Corp. (7203) and Honda Motor Co.’s US deliveries
each fell 21 percent in June from a year earlier, while General
Motors Co. and Ford Motor Co. saw sales gain 10 percent, less
than estimates, according to industry data on July 2.
“Sales did slow in the spring due to high fuel prices and
that drove our inventory a little bit higher than planned,” GM’s
vice president for US sales Donald Johnson said on a conference
call July 1. “You have to have the right level of inventory and
the right mix of inventory in order to meet the demand that’s out
there and, in fact, to grow.”
To contact the reporter on this story:
Bob Willis in Washington at
akowalski13@bloomberg.net
To contact the editor responsible for this story:
Christopher Wellisz at
cwellisz@bloomberg.net
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