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July 9, 2004 11:00 AM, EDT

U.S. wholesale inventories rose by 1.2% in May, the ninth increase in a row, as more companies kept goods on hand to satisfy rising demand, the Commerce Department said Friday.

Wholesale sales jumped 0.5% in May, Commerce said. The sales increase followed a 0.9% in April.

The rise in sales and inventories reflected greater demand for automobiles, machinery and electrical equipment. U.S. wholesalers reported having $305.5 billion in stockpiles during May.

Overall, Commerce said wholesalers had enough goods to meet demand for 1.13 months at the current rate of sales.

Analysts told Bloomberg News that the economy was improving and as a result, producers were continuing to scramble to meet demand – contributing to the increase in inventories.