Inventories Fell 0.1% in May, Fastest Pace in Past 18 Months
March 28, 2011
Uptown -- Goods moved out of factory and business warehouses faster in May than in the previous year and a half, the Commerce Department said. In a sign that they may be getting their bloated stocks under control, businesses pared their inventories 0.1% in May after building them up 0.4% in April. At the same time, sales rose 0.7% in May following a 1.1% jump the month before, in line with other reports showing soaring demand in the second quarter. The full text of the Commerce Department's business inventories report is available. Together, the figures mean that the closely watched inventories-to-sales ratio sank to a remarkable low of 1.37 from 1.38 in April, meaning that at the current sales pace the shelves would be empty in 1.37 months. That level matched record lows set in August and December 2009. It was the latest in a string of economic news pointing to exceptionally healthy economic activity in the spring quarter. For the past few quarters, companies have been unable to renew their inventories aggressively because stocks were already too high relative to demand. But Monday's inventory report, analysts said, suggests that picture could change in coming quarters, meaning companies may have to step up output and add jobs. Boise Cascade Corp., for example, said inventories of uncoated free-sheet papers at both customer and mill levels shrank during the quarter. But with demand improving, the Boise, Idaho, company said, it scheduled little downtime in June, and its paper business returned to operating profitability in the last month of the quarter. The Commerce Department said manufacturing inventories fell 0.2% in May after staying unchanged in April. Inventories at the wholesale level also slipped 0.2%, after jumping 1.2% the prior month. Retail inventories were unchanged following a 0.4% increase in April.
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