Wholesale inventories rise slightly

Inventories at U.S. wholesalers rose 0.5% in May and sales gained a solid 1.3%, the government said Tuesday in a report that suggested wholesalers may need to begin rebuilding stocks.

Separate reports Tuesday showed lackluster sales last week at chain stores as consumers cut back on spending amid higher gasoline prices and troubles in the housing market.

The increase in wholesale inventories in May was a bit stronger than economists had expected, but still fell well short of the rise in sales.

The inventory-to-sales ratio -- which measures how long it would take to sell off stocks at the current pace -- declined for a fourth straight month to a record low of 1.11 months.

The drop in the ratio is “consistent with the building body of evidence that the inventory correction has brought stocks back to acceptable levels,” said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Conn.

He said an effort to rebuild inventories could give a significant boost to U.S. economic growth.

Redbook Research said sales last week at stores open at least a year were up only 0.8% from a year earlier, a slowdown from an already tepid gain of 1.2% in the previous week.