Weaker wholesale inventories to hit U.S. Q4 GDP

U.S. wholesale inventories for October are dropped by 0.1% month on month. Markets were expecting the reading to post a modest increase. Inventories for durable as well as nondurable goods categories are contracted by 0.1%.

Similarly, wholesale automotive and computer recorded 0.5% and 0.7% fall respectively in October. The negative growth in these two products caused around 60% of fall in total inventories.

"Weaker-than-expected wholesale inventory growth in October suggests a slower pace of inventory growth in Q4 as well. Our Q4 GDP tracking estimate fell two-tenths to 1.7%. Weaker-than-expected wholesale inventories also bring down the estimated profile for total business inventory growth in October. We have revised down our forecast for the Friday release to 0.0%, from 0.1% previously", says Barclays in a research note.