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US wholesale sales fall after one year

Washington, July 10, 2010

US wholesale sales fell unexpectedly for the first time in more than a year, lifting inventories to their highest level in 11 months, a government report showed yesterday.

Analysts said a slackening in demand would now lead businesses to try to curb the inventory buildup, which could significantly weigh on economic growth, according to a report in our sister publication, the Gulf Daily News.

Total wholesale inventories rose 0.5 per cent to $398.81 billion, the Commerce Department said, following a revised 0.2 per cent gain in April.

Economists polled by Reuters had expected stocks of unsold goods at US wholesalers to rise 0.4 per cent in May from a previously reported 0.4 per cent increase. Compared with May last year, inventories were down 2.1 per cent.

Inventory rebuilding from record low levels has been one of the key drivers of the economy's recovery from the worst recession since the 1930s.

Business inventories contributed 1.9 percentage points to growth in the first quarter, but their influence is expected to fade later in the year, which could significantly slow the recovery as consumer spending shows signs of cooling.

Sales at wholesalers fell 0.3 per cent to $350.65 billion in May.

The decline in sales was the first since March last year. Sales rose by an upwardly revised 0.9 per cent in April, which was previously reported as a 0.7 per cent increase.

In the 12 months to May, sales were up 15.1 per cent.

Analysts had expected sales at wholesalers to rise 0.5 per cent in May. Sales in May were pulled down by a 1 per cent drop in purchases of non-durable goods.

The weak sales lifted the inventory-to-sales ratio, a measure of how long it would take to sell stocks at the current sales pace, to 1.14 months' worth from April's 1.13 months, the Commerce Department said.

The ratio had steadily declined from a peak above 1.40 month's worth at the beginning of last year. – TradeArabia News Service




Tags: Sales | Washington | Inventory | US wholesale |

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