Today's advance indicators report
Today's advance indicators report revealed a much narrower than expected October trade deficit for goods, thanks to a much bigger downside surprise for imports than exports. Analysts saw downward revisions in the September wholesale and retail inventory figures that trimmed our assumed Q3 GDP growth boost to 2.0% from 2.1%, versus the 1.9% advance figure. Yet, the big October import drop and retail inventory rise raised our Q4 GDP growth estimate to 2.4% from 2.0%. Lean wholesale inventories and an import drop bucked the expected tariff front running impact, while retail inventories failed to show the expected big vehicle inventory hit from the UAW-GM strike. The strike did, however, prompt big declines in auto exports and imports for a second consecutive month, with reduced vehicle and parts traffic across the NAFTA auto corridor. For inventories, the data imply a 0.2% October gain for business inventories, given an assumed 0.1% rise for factory inventories. Analysts expect the current account deficit to widen to $131.5 B in Q3 and $131.0 B in Q4, from $128.2 B in Q2. Analysts expect the annual current account deficit to rise to a $527 B new expansion high in 2019 from a $491 B prior expansion-high in 2018.