Inventories at U.S. retailers surged by much more than expected in May, pointing to a strong showing for economic growth in the second quarter.
Retail inventories rose by a seasonally adjusted 0.8 percent in May, the Commerce Department said on Wednesday. The prior month’s growth was revised up to show 0.3 percent growth from the initial report of 0.2 percent growth.
Economists had been expecting a milder growth spurt closer to last month’s initial figure.
Many retailers have been suggesting that they have completed the process of reducing excess inventories, setting the stage for a restocking of store shelves in preparation for the fall. Executives of mega-retailers such as Target and Walmart have indicated that the problem of excess inventories is now “in the rear-view mirror,” as Target’s chief financial officer said last month.
Compared with a year ago, retail inventories are up seven percent after seasonal adjustment.
The recovery of car dealer inventories is a major driver of the overall recovery. Retail inventories of autos and parts rose a seasonally adjusted 2.9 percent in May after a 1.6 percent rise in April. Compared with a year ago, when chip shortages were still holding back car manufacturing despite strong consumer demand, auto retail inventories are up 27.3 percent.
Excluding autos and parts, retail inventories were flat for the month after falling 0.3 percent in April. Compared with 12 months earlier, May inventories were up 0.7 percent.