US Q3 GDP, second estimate review, GDP Q4 tracker update - Nomura

Analysts at Nomura offered a review of the US Q3 GDP, second estimate.

Key Quotes:

"The Bureau of Economic Analysis (BEA) raised Q3 GDP to 3.2%, higher than expectations (Nomura, Consensus: 3.0%), from the prior estimate of 2.9%. The upside surprise is attributable to greater-than-expected upward revisions to PCE and smaller-than-expected downward revisions to inventory investment. PCE was up 2.8% (previously reported as 2.1%), beating our expectation of 2.3%, due to strong services and durable goods spending with less drag from nondurable spending. The contribution to GDP of private inventory investment was lowered to 0.49pp from 0.61pp, less than we had expected."

"Final demands seem to have been steady as final sales were revised upwards to 2.7% (previously reported as 2.3%), following a similarly paced 2.6% increase in Q2. On the downside, private nonresidential investment remained weak, which was lowered to 0.1% from 1.2%, driven by downward revisions to equipment and intellectual property. Government consumption was reduced to 0.2% from 0.5%, driven by a downward revision in state and local government spending."

"All in all, the second estimate of Q3 GDP appears more positive than the prior estimate."

Q4 GDP tracking update:

"The upward revision to PCE in the second estimate was stronger than expected, while the downward revision to inventory investment for Q3 was smaller. The smaller-than-expected downward revisions to inventory investment in Q3 imply less output in Q4 as businesses may adjust their output levels to avoid stockpiling. As a result, we lower our Q4 GDP tracking estimate by two-tenths to 1.2% from 1.4% previously."