Business Inventories Rise Only Slightly

Business inventories rose a slightly lower-than-expected 0.3 percent in May but follow a 0.5 percent rise in April in results that put the outlook for inventory contribution to second-quarter GDP at roughly flat. There are hints that inventory growth is exceeding underlying demand as 5.3 percent year-on-year growth for inventories is well above the 1.5 percent rise for business sales. Yet any imbalances aren't increasing as the inventory-to-sales ratio in May held steady at 1.39.

Inventory growth at manufacturers was the slowest in May at 0.2 percent which is probably a positive given indications of slowing in the sector (indications, however, that do not include this morning's industrial production report). Growth at wholesalers was 0.4 percent in May with retailers also at 0.4 percent.