With housing and manufacturing showing strength the outlook for fourth-quarter GDP was building, until that is this morning's advance trade and inventory data. October's goods deficit was much higher-than-expected, at $68.3 billion for a very sizable $4.2 billion increase from September. The details speak to weakness with exports down 1.0 percent, reflecting declines for food products and capital goods, while imports rose 1.5 percent on increases in industrial supplies and, once again, consumer goods.
Inventory data for October show draws for both wholesalers and retailers, at minus 0.4 percent and minus 0.1 percent respectively which are both negative for GDP.
Both trade, where the deficit had been narrowing, and inventories, where builds had been rising, were positives for second- and third-quarter GDP but the opening fourth-quarter look at these two components point to understandable give back.
The goods deficit in October is expected to widen to a consensus $64.8 billion vs $64.1 billion in September. Looking back at September, imports rose 0.9 percent on increases for capital goods, industrial supplies and food products. Exports rose 0.7 percent but strength was isolated to industrial supplies with capital goods, consumer goods, and vehicles all down. Also released with the report will be advance October data for both wholesale inventories and retail inventories which, like net exports, are also GDP inputs.