United States wholesale inventories did not rise much during May as automobile stocks saw their largest decrease in over two and a half years, indicating that inventory investment probably stayed on a drag on economic growth during the second quarter. The Commerce Department stated on Tuesday that wholesale inventories had increased 0.1 percent after jumping 0.7 percent during the month of April. Economists had predicted wholesale inventories going up 0.2 percent in May. Inventories make up a large portion of the gross domestic product. The component of wholesale inventories that goes into the calculation of GDP – wholesale stocks excluding autos – jumped by 0.4 percent in May.
Higher prices for commodities, including petroleum, was a primary reason for the increases in ex-autos wholesale inventories during the month of May. Be that as it may, there probably will not be growth in GDP from the prices during the second quarter after bring adjusted for inflation. After the data, the Atlanta Federal Reserve decreased its estimates for second-quarter GDP growth by 0.1 percent to a 2.3 percent annualized rate.
“What has been reported suggests there was a sharp slowing in the pace of inventory accumulation between the first quarter and second quarter,” Daniel Silver, an economist at JPMorgan in New York, said.
According to Silver, data up to now suggests that inflation-adjusted change in inventories during the second quarter was between a rate of $20 billion and $25 billion. That implied inventories subtracted an entire percentage point from GDP growth in the second quarter, he added. A report last week indicated that factory inventories fell during the month go May. Retail inventory data for May will be released on Friday. Inventory investment dropped just a bit more than 0.2 percent from GDP growth during the first quarter, rising output to a 1.1 percent annualized rate.