US business inventories likely showed modest increase in May

MarketsAssociated Press

The Commerce Department reports on May business stockpiles at 10 a.m. Eastern Tuesday.

STOCKPILES HIGHER: The expectation is that stockpiles held by U.S. businesses increased 0.3 percent, according to a survey of economists by data firm FactSet.

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INVENTORIES AND SALES: In April, businesses increased their stockpiles by the 0.4 percent while their sales increased for a second month.

Economists hope that a rebound in retail sales will lead to stronger consumer spending in coming months and this will help lift the overall economy following a rocky start to the year.

The overall economy, as measured by the gross domestic product, actually shrank at an annual rate of 0.2 percent in the January-March quarter, reflecting the impact of an unusually harsh winter, labor disruptions at West Coast ports and a steep drop in energy prices, which triggered sharp cutbacks in investment by energy companies.

Analysts believe those adverse effects were mostly temporary and they are forecasting GDP growth will rebound to around 2.5 percent in the April-June period, and then accelerate to growth above 3 percent in the second half of the year.