The Census Bureau’s Advance Economic Indicators show a slight improvement in exports and rising retail and wholesale inventories.
Advance International Trade in Goods
The international trade deficit was $62.9 billion in August, down $0.9 billion from $63.9 billion in July. Exports of goods for August were $128.9 billion, $0.3 billion more than July exports. Imports of goods for August were $191.8 billion, $0.6 billion less than July imports.
Advance Wholesale Inventories
Wholesale inventories for August, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $608.4 billion, up 1.0 percent from July 2017, and were up 4.6 percent from August 2016. The June 2017 to July 2017 percentage change was unrevised at up 0.6 percent.
Advance Retail Inventories
Retail inventories for August, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $625.0 billion, up 0.7 percent from July 2017, and were up 3.7 percent from August 2016. The June 2017 to July 2017 percentage change was revised from down 0.1 percent to virtually unchanged.
Regarding the Hurricane Impact, the Census Bureau states
We cannot isolate the effect of Hurricane Harvey on the Monthly Retail Trade Survey (MRTS) estimates since the sample is designed to measure retail activity at the national level and not at specific geographic areas. … The reliability of the monthly retail estimates as measured by the coefficient of variation for monthly totals and the standard error for month‐to‐month change has not changed substantially.
The census bureau made simar statements regarding wholesale trade. The Census Bureau also had this extra blurb regarding the Wholesale Trade Impact.
Even though we cannot isolate the effect, we did receive indications from companies that the hurricane had both positive and negative effects on the wholesale data. Some firms reported a drop in sales or increased inventories due to power outages and closures. Other firms reported decreased inventories due to damages suffered from the storm. In addition, many firms reported that they were not affected by Hurricane Harvey. For companies impacted by Hurricane Harvey, we review their contribution to the estimates to ensure accurate representation to the overall industry estimates.
Inventory Contribution to GDP?
Hurricanes certainly changed the value of inventories on auto dealer lots in impacted areas.
In turn, this will (already has) impact new orders for autos and other equipment. For details, please see Durable Goods Order Jump Led By Autos: Positive Hurricane Impact?
Because of the destruction and replenishment of inventories, inventory contribution to GDP in the third quarter will be very difficult to judge.
On the surface, today’s report rates to increase the contribution of change in private inventories (CIPI) to third-quarter GDP. After taking into account the destruction of existing inventories, the proposition is questionable.
The minor change to the trade deficit is nearly meaningless.
Mike “Mish” Shedlock