Main takeaways:
  • Lower than anticipated wholesale inventories in October and downward revisions to the previous month led analysts to adjust GDP growth estimates slightly down in Q3 and Q4 by about one tenth. GDP growth tracking for Q4 is in the 1.5% to 2.0% range.
  • Wholesale sales are moving sideways (current prices) after a sharp drop earlier this year.
  • However, adjusting for prices, wholesale sales are now back to trend.
  • Inventory buildup is mostly due to petroleum.

The chart below shows that retail, wholesale and manufacturing sales, all slowed down materially since mid-2014.
Retail sales excluding gasoline is still growing at a reasonable pace (see US Retail Sales -- trend remains unchanged Oct/2015)
So, let's take a closer look at wholesale sales.


Part of the slowdown in wholesale sales is clearly due to price effect. Adjusting for falling prices, wholesale sales were roughly flat from late 2014 to mid 2015 and now appears to be back to the trend observed since 2009.

Another frequent concern is the inventory buildup at wholesalers. The chart below show that the inventory to sales ratio has increased sharply in the last three quarters.

But a similar price effect might be distorting oil inventories. Excluding autos, farm, and petroleum, the rise in the inventory-to-sales is less pronounced.