U.S. business inventories rise in April, supporting second-quarter growth outlook
Inventory accumulation picks up at U.S. businesses in April, adding to signs that stock rebuilding is supporting economic activity in the second quarter. The gain follows several quarters in which inventories are drawn down and have little effect on first-quarter GDP growth.
Highlights
- U.S. business inventories rose 0.5% in April after a 1.0% increase in March, supporting forecasts for second-quarter GDP growth.
- April saw retail inventories up 0.7%, wholesale up 0.6%, and manufacturing up 0.3%, with motor vehicle inventories revised to a 0.8% increase.
- Business sales rose 1.2% in April, reducing the inventories-to-sales ratio to 1.31 months, signaling inventory investment may no longer weigh on growth.
April inventory gains across retail, wholesale and manufacturing
As reported by the Commerce Department's Census Bureau and Reuters, business inventories rise 0.5% in April after increasing 1.0% in March, matching economists' expectations. Inventories are up 2.7% from a year earlier, with the latest increase pointing to a possible contribution from inventory investment to second-quarter gross domestic product.Retail inventories increase 0.7% in April after rising 0.8% in March. Motor vehicle inventories rise 0.8%, revised from the previously reported 0.9%, after a 1.2% gain in March.
Retail inventories excluding autos, a component used in the GDP calculation, rise 0.6% in April, unchanged from March. Wholesale inventories climb 0.6%, while stocks held by manufacturers increase 0.3%.
Sales momentum and broader economic implications
Business sales increase 1.2% in April after surging 2.2% in the previous month. At the April sales pace, it would take 1.31 months for businesses to clear shelves, slightly down from 1.32 months in March.The data suggest inventory investment is becoming less of a drag on growth after four straight quarters of drawdowns. Inventories, one of the most volatile components of GDP, almost have a neutral effect on the economy's 1.6% annualized growth rate in the first quarter.
The inventories-to-sales ratio stands at 1.38 months in April 2025, providing a longer-term comparison point for how stock levels are tracking against demand.
CarMax’s first-quarter results highlighted how higher used-vehicle prices and firmer wholesale demand helped lift revenue above expectations, even as profitability slipped versus a year earlier. Our earlier coverage also noted that affordability pressures are still weighing on retail auto demand, while elevated new-car prices and tariff effects can steer more buyers toward pre-owned vehicles—an important backdrop when tracking inventory levels and sales momentum across the economy.
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