June 9 (Bloomberg) -- Inventories at U.S. wholesalers fell in April for the eighth straight month as distributors tried to cut excess supply apace with decreasing sales. The 1.4 percent decline in stockpiles was larger than forecast and followed a revised 1.8 percent decrease in March that was larger than previously estimated, the Commerce Department said today in Washington. Sales fell 0.4 percent to the lowest level since 2005. The economy shrank at a 5.7 percent annual pace in the first quarter, reflecting a record drawdown in inventories that may set the stage for a return to growth later this year. Companies including General Motors Corp. are among those still paring output to limit the glut of stocks. “You probably won’t see a big hit to GDP in the second quarter from inventories,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “Even though they’re falling quite sharply, they’re falling at a slower rate.” At the current sales pace, it would take 1.31 months for distributors to deplete the amount of goods on hand, compared with 1.32 months in March. The reading was as low as 1.1 months in June 2008. Inventories at wholesalers were forecast to drop 1.2 percent after an initially reported 1.6 percent decrease in March, according to the median estimate of 36 economists surveyed by Bloomberg News. Projections ranged from a decline of 1.7 percent to an increase of 1 percent. Stocks, Treasuries Stocks and Treasuries rose after the U.S. Treasury’s announcement that it approved 10 banks to buy back $68 billion of government shares, reducing officials’ authority to intervene in everything from lending and hiring strategies to compensation policies. The Standard & Poor’s 500 Index gained 0.2 percent to 940.63 as of 10:09 a.m. in New York. Yields on the benchmark 10- year note fell to 3.85 percent from 3.88 percent late yesterday. Today’s inventories report showed stockpiles of durable goods, or those meant to last at least three years, fell 2.2 percent in April after a 2.6 decline in March. Durable sales decreased 1.9 percent. Auto inventories decreased 4.5 percent as sales plunged 7.8 percent, the most since November, today’s report showed. That pushed the industry’s inventory-to-sales ratio up to 2.09 months from 2.02 months in March. Auto Industry The auto industry is at the forefront of inventory reductions. General Motors, which filed for bankruptcy protection last week, plans to idle 13 U.S. plants for as long as 9 weeks each to reduce inventory. Eight of its 15 U.S. vehicle assembly plants were operating last week. GM last month informed 1,100 “underperforming” U.S. dealers they would be terminated as the automaker starts shrinking its retail network. “We have been going through certainly a very systematic reduction process in our dealer inventories,” GM Chief Executive Officer Fritz Henderson said in a May 14 interview. Professional equipment, such as computers, is among the industries getting a grip on oversupply. Stockpiles fell 1 percent as sales increased 0.9 percent, pushing the months supply down to the lowest level since November 2007. Texas Instruments Inc., the second-largest U.S. semiconductor maker, this week raised its second-quarter sales and profit forecasts because customers were replenishing inventories. Manufacturers of notebook computers and mobile- phone equipment were among the customers that increased orders the most, and demand in Asia was stronger than in the U.S. and Europe, the company said. Non-Durable Goods Stockpiles of non-durable goods such as fuels and grains were little changed after declining 0.5 percent in March. Sales of such items increased 0.8 percent. Wholesalers make up about 25 percent of all business stockpiles. Factory inventories, which account for about a third of the total, fell 1 percent in April, Commerce reported June 3. Retail stockpiles, which make up the rest, will be included in the June 11 business inventories report. Inventories shrank by a record $91.4 billion annual rate in the first quarter, subtracting 2.3 percentage points from gross domestic product. The world’s largest economy shrank at a 5.7 percent annual pace in the firs three months of the year. Recent reports show companies are cutting stockpiles. The Institute for Supply Management’s gauge of inventories at factories fell to 32.9 last month from 33.6 in April. Readings below 50 signal contraction.

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