WASHINGTON (Reuters) - U.S. wholesale inventories rose a bit more than initially thought in April, with stocks in the automotive sector increasing by the most in eight months.
The Commerce Department said on Friday wholesale inventories rebounded 0.8%, instead of increasing 0.7% as reported last month. Wholesale inventories were unchanged in March. They rose 7.6% on a year-on-year basis in April.
The component of wholesale inventories that goes into the calculation of gross domestic product advanced 0.5% in April.
An accumulation in inventories contributed to the 3.1% annualized increase in GDP growth in the first quarter. Inventories are expected to be a drag on economic growth in the second quarter. Growth estimates for the second quarter are below a 2% pace.
The inventory overhang is concentrated in the automobile industry, which is experiencing a slowdown in sales. In April, wholesale auto inventories increased 3.8%, the largest gain since August 2018, after falling 0.3% in the prior month.
Sales at wholesalers dropped 0.4% in April after gaining 1.8% in March. At April's sales pace it would take wholesalers 1.34 months to clear shelves, up from 1.33 months in March.