Economy

Business Inventories Indicate Big Boost for Q3 GDP

Employees have short meeting in the warehouse to check business inventory levels of goods. First in first out. (Photo: AdobeStock)

The U.S. Census Bureau reported new manufacturing and trade statistics for August 2018, and business inventories a big boost for third-quarter gross domestic product (GDP). Worth noting, the strength of business inventories are helping to offset the widening trade deficit, which was falling during tariff and trade negotiations.

In the last report, there were big revisions to previous estimates, all of which are a net positive for Q3 GDP. The Bureau of Economic Analysis (BEA) recently reported Q4 GDP held firm at 4.2%, the Federal Reserve upped its forecast for 2018 and the GDPNow model estimate was revised to 4.0% on October 15.

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	Prior	Prior Revised	Consensus	Consensus Range	Actual
Inventories – M/M change	0.6 %	0.7 %	0.5 %	0.3 % to 0.7 %	0.5 %

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Sales

The combined value of distributive trade sales and manufacturers’ shipments for August, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,461.9 billion, up 0.5% (±0.1%) from July 2018 and was up 7.8% (±1.2%) from August 2017.

Inventories

Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,960.8 billion, up 0.5% (±0.1 percent) from July 2018 and were up 4.2% (±1.2%) from August 2017.

Inventories/Sales Ratio

The total business inventories/sales ratio based on seasonally adjusted data at the end of August was 1.34. The August 2017 ratio was 1.39.

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PPD Business Staff

PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.