Wholesale Inventories Jump 1%, Offsetting Drag on Q3 GDP

The U.S. Census Bureau reported new wholesale trade statistics for August 2018 and the forecast-beating build-up will benefit third-quarter (Q3) gross domestic product (GDP). The widening of the U.S. trade deficit in Q3 is a marked change from the narrowing during tariff negotiations.

There were big revisions to previous estimates, all of which are a net boon for Q3 GDP. The Bureau of Economic Analysis (BEA) recently reported Q4 GDP held firm at 4.2% and Q3 economic growth is forecast to post another strong reading.

Sales

Sales of merchant wholesalers — except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes — were $511.1 billion in August 2018. That’s up 0.8% (±0.4%) from the revised July level and 9.2% (±3.5%) from the August 2017 level. The June 2018 to July 2018 percent change was revised from the preliminary estimate of virtually unchanged (±0.2%)* to up 0.2% (±0.4%)*.

Inventories

Total inventories of merchant wholesalers — except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes — were $642.7 billion at the end of August, up 1.0% (±0.2%) from the revised July level. The median forecast expected 0.8%.

Total inventories were up 5.3% (±3.7%) from the revised August 2017 level. The July 2018 to August 2018 percent change was revised from the advance estimate of up 0.8% (±0.2%) to up 1.0% (±0.2%).

Inventories/Sales Ratio

The August inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.26. The August 2017 ratio was 1.30.