Key facts
- U.S. business inventories rose 0.3% in May.
- Business sales increased 2.1% in May.
- The inventories-to-sales ratio reached its lowest level since late 2021.
- Motor vehicle inventories increased 1.1% in May.
- Inventories have been drawn down for four straight quarters.
U.S. business inventories saw a moderate increase of 0.3% in May, a pace that aligns with economists' expectations. This follows a 0.6% rise in April. The build-up in inventories occurred alongside a significant acceleration in business sales, which climbed 2.1% in May after a 1.4% increase the previous month. This dynamic has driven the inventories-to-sales ratio down to 1.28 months, the lowest level recorded since November 2021, and down from 1.30 months in April. The ratio stood at 1.39 months in May 2025.
Retail inventories specifically rose by 0.6% in May, with motor vehicle inventories showing a notable increase of 1.1%, revised up from a previous estimate of 1.0%. Inventories of retail goods excluding autos, a key component for calculating gross domestic product (GDP), increased by 0.3%, slightly lower than the previously estimated 0.4% but still indicating solid underlying domestic demand. Wholesale inventories experienced a more modest uptick of 0.1%, while stocks at manufacturers climbed by 0.2%.
The moderate inventory build, despite a strong increase in goods imports during the first two months of the second quarter, suggests robust underlying domestic demand. This trend continues a pattern of inventory drawdown, which has been observed for four consecutive quarters.