Wholesale Inventories Start Strong In Q4

Wholesale inventories open the fourth quarter with a strong 0.8 percent build which will prove a plus for fourth-quarter GDP. And a strong upward revision to September, now at 0.7 percent, will be a plus for the next revision of third-quarter GDP.

Yet the pace of future builds may be limited given soft sales totals the last two reports, down 0.2 percent in October and up only 0.1 percent in September. Looking at year-on-year rates, inventory growth and sales growth are evenly matched, at respective growth rates of 6.9 and 6.8 percent.

The rise in inventories and the drop in sales pulls up the stock-to-sales ratio to 1.28 from 1.27 and 1.26 in September and August, offering another indication that inventories at wholesalers are becoming perhaps too heavy.