WASHINGTON, July 16 (Reuters) - U.S. business inventories
fell by the most on record in May amid the COVID-19 crisis,
supporting expectations for the sharpest drop in gross domestic
product in the second quarter since the Great Depression.
The Commerce Department said on Thursday business
inventories declined 2.3% in May, the biggest decline since the
government started tracking the series in 1992, after falling
1.4% in April. Inventories, a key component of GDP, have now
declined for five straight months.
May's plunge in business stocks was in line with economists'
expectations.
Retail inventories plummeted 6.2% in May, instead of 6.1 as
estimated in an advance report published last month. That
followed a 3.8% drop in April. Motor vehicle inventories tumbled
14.9% rather than 15% as previously reported. Retail inventories
excluding autos, which go into the calculation of GDP, fell 1.6%
instead of 1.5% as reported last month.
Goods imports decreased in May to their lowest level since
July 2010 as the coronavirus crisis suppressed demand and
upended global trade. Imports have also been curbed by the White
House's trade war with China. Though the shrinking import bill
is a positive in the calculation of GDP, it has been
overshadowed by an even bigger decline in exports.
That has led a widening of the trade deficit, which together
with the continued inventory drawdown are expected to contribute
to the deepest decline in GDP on record. The economy contracted
at a 5.0% annualized rate in the first quarter, the sharpest
pace of decline in GDP since the 2007-2009 Great Recession.
The economy fell into recession is February. Economists
expect GDP shrank at a pace as sharp as 35% in the April-June
quarter. The government will publish its advance second-quarter
GDP estimate at the end of the month.
Wholesale inventories fell 1.2% in May. Stocks at
manufacturers rose 0.2%. Business sales rebounded 8.4% in May
after tumbling 14.4% in the prior month. At May's sales pace, it
would take 1.51 months for businesses to clear shelves, down
from 1.67 months in April.
(Reporting by Lucia Mutikani
Editing by Chizu Nomiyama)