US Q3 GDP tracking 1.2% after August business inventories

US total business inventories were unchanged in August, weaker than forecasted. The details of the report, however, show that the miss relative to expectations was driven by a slower pace of retail motor vehicle inventory accumulation. 

Excluding autos, retail inventories were up 0.4% m/m in August and revised higher in July to 0.3% m/m (initial: 0.2%). The BEA relies on different source data to estimate the retail motor vehicle portion of private inventory investment in the current quarter estimate of GDP. 

Thus, the effect on the estimate of Q3 growth was actually the opposite of what the headline business inventories number would suggest. 

"Modestly stronger-than-expected nonautomotive retail inventories in August, along with upward revisions to July, suggest a better pace of inventory investment in Q3 than was expected prior to this report. As a result, the Q3 GDP tracking estimate rose two-tenths, to 1.2%", says Barclays.