Auto inventories fall by biggest amount in almost 4 years WASHINGTON (MarketWatch) -- U.S. business inventories plunged for the ninth straight month in May while sales fell modestly, the Commerce Department reported Tuesday. Inventories at U.S. businesses fell 1.0%. Sales fell 0.1%. Wall Street economists had predicted inventories would fall 0.9%. If sales stabilize, economists expect businesses to add to their store shelves. Even if inventories do not turn around, they are not expected to continue to free-fall. This is the primary factor behind many forecasts of positive GDP growth in the second half of the year. The inventory-to-sales ratio fell to a reading of 1.42, down from 1.43 in April. The monthly inventory report rarely moves financial markets, mostly because many of the numbers have been previously reported. Economists, however, find the data useful to project quarterly growth. Already released data show a solid 0.6% fall in factory inventories and a large 0.8% fall in wholesale inventories. Retail inventories, the only new information in the report, dipped 1.6% in May, led by a sharp 4.2% decline in the retail auto sector. This marked the biggest decline June 2005. Excluding motor vehicles, retail sales fell 0.6% in May. But all categories of retail inventories, except for food, declined in May The retail inventory-to-sales ratio fell to 1.50 in May from 1.53 in April, according to the Commerce Department's data. In the past year, business inventories are down 8.0%, while sales are down 17.8%. The data aren't adjusted for price changes. In a separate report Tuesday, the Commerce Department said U.S. retailers' sales rose 1.0% in June, a better-than-expected performance.

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