US Q3 GDP preview - Nomura

Analysts at Nomura noted todays release of Q3 GDP, first estimate and offered a preview.

Key Quotes:

"Incoming data for Q3 suggest that the economy reaccelerated following a lackluster performance in the first-half of the year. Incoming data on the consumer suggest personal consumption expenditures should be the primary source of growth in Q3.

Also, monthly trade data for July and August suggest exports grew strongly over the quarter and net trade should contribute positively to growth. We think that government expenditures, led by better federal government spending, likely grew at a steady pace. However, other sectors of the economy likely lagged.

Within nonresidential fixed investment, weak business spending on equipment was likely a drag on growth. Also, construction activity data points to a negative contribution from residential investment to growth for a second month. Moreover, we think that there was more inventory adjustment to be had in Q3 and forecast that it was a drag on growth by 0.3pp.

Additionally, the September release of the advance goods trade balance suggests that exports grew at a steady pace and inventories accumulation continued, which are positive for Q3 GDP. Considering the data received this week, we revised upwards our Q3 GDP forecast to 2.6% from 2.2% reported previously. Consensus currently forecasts a 2.5% q-o-q increase."