Wholesale inventories drop - lowest since '07

WASHINGTON (Reuters) -- U.S. wholesale inventories shrank in May for the ninth month in a row to their lowest level since August 2007, government data showed on Thursday.

The 0.8% drop to $402.24 billion was smaller than the 1.0% decline analysts polled by Reuters had expected. The Commerce Department also revised April's fall to 1.3% from the 1.4% decline reported last month.

Sales at merchant wholesalers rose 0.2%, beating analysts' expectations that they would be unchanged and pushing the inventory-to-sales ratio, a measure of how long it would take to deplete current stocks, down to 1.29 months' worth from April's 1.31 months. That was the lowest since a matching ratio in November.

Inventories of durable goods, items meant to last at least three years that make up more than 60% of wholesale inventories, fell for the eighth month in a row in May, by 1.5%. They were also down 8.2% from a year earlier.

Nondurable items, which include groceries, petroleum and drugs, rose 0.3% after being unchanged in April.

Petroleum inventories increased 4.5%, while sales rose 4.6% in May. The Commerce Department also said sales of motor vehicles and automotive parts were up 4.4% in their largest gain since December 2006.