United States business inventories surged

Inventories held by U.S. businesses rose modestly in May, as retailers stocked up to meet customer demand.

The Commerce Department said U.S. business inventories rose 0.2 percent in May after edging up 0.1 percent in April. Sales rose 0.2 percent.

Manufacturers, pinched by weak global demand and a strong dollar that makes their products costlier in world markets, left inventories unchanged. Over the past year, factory inventories were down 3.0 percent.

Meanwhile, retailers raised inventories by 0.5 percent in May and 6 percent over the past year, a sign they are confident that American shoppers will continue to spend.

Auto dealers expanded inventories by 0.7 percent, furniture and appliance stores by 0.5 percent and sellers of building materials and garden supplies by 1.1 percent. But department stores cut inventories by 0.7 percent.

A slowdown in restocking empty shelves has dragged down economic growth three straight quarters and helped limit growth to a lackluster 1.1 percent annual pace from January through March. Growth is expected to pick up in the second quarter on a rebound in consumer spending.

Meanwhile, Some U.S. businesses say Brexit hurting them. Britain's vote to leave the European Union is already taking a toll on some small U.S. businesses, with canceled tour bookings in New York and U. K. retailers cutting back their orders from American suppliers.

The plunge in the pound against the U.S. dollar after the vote three weeks ago makes goods and services more expensive for those in the U.K., and means British tourists get less for their money while traveling elsewhere.

Many of the companies are trying to plot a course without clarity on exactly when or how a split may occur. Businesses with facilities in Britain wonder if they'll have to establish a presence elsewhere. Others worry the broader European economy may weaken further, making investment in those countries a bad idea.

Moreover, Minnesota ranked fourth among America's top states for business in 2016, down from first place a year ago, according to CNBC First in Business Worldwide, a business and financial TV channel.

The state scored 1,550 out of a possible 2,500 points in a survey of competitiveness. The survey was developed with input from business and policy experts, government sources, the CNBC Global Chief Financial Officers Council, and states themselves.

Minnesota ranked second in quali- ty of life and education, fifth in infrastructure and transportation, and ninth in technology and innovation.

Utah, Texas and Colorado topped the list of top business states. See www.topstates.cnbc for the rest of the state rankings.

Minnesota ranked 35th in the cost of doing business, 27th in business friendliness and cost of living, 21st in access to capital, 17th in economy, and 15th in workforce.

CNBC First in Business Worldwide said the state's taxes are among the highest in the country. Minnesota has an individual income tax rate of 9.85 percent, a corporate tax of 9.8 percent, and a top state and local sales tax of just under 8 percent.

While job growth and the overall economy have slowed a bit in the last year, unemployment in the state is well below the national average, according to the survey.