US wholesale inventories revised lower in May, dampening growth outlook

U.S. wholesale inventories rose only 0.1% in May, a downgrade from the 0.3% increase previously reported. The Commerce Department’s Census Bureau said inventories grew 0.7% in April and were up 4.0% year‑over‑year in May, while business inventories have been drawn down for four consecutive quarters.

The modest inventory growth is expected to blunt the anticipated boost to second‑quarter GDP, with the Atlanta Fed’s model now forecasting a 1.4% annualized increase. The economy grew 2.1% in the January‑March quarter. A surge in imports to a 14‑month high in May—partly driven by businesses front‑loading purchases amid Middle East war‑related price concerns—added to inventory levels.

Sector‑specific changes included a 1.2% rise in professional‑equipment stocks and a 4.0% jump in computer‑equipment inventories, likely reflecting an artificial‑intelligence investment surge. Furniture inventories rose 0.5% and hardware 0.6%, while metal inventories fell 2.8% and petroleum stocks dropped 5.7%. Wholesale sales increased 3.4% in May, the fastest pace since April 2012, shortening the inventory‑to‑sales ratio to 1.31 months.