US data reviewed with uptick in GDP tracking estimate - Nomura

Analysts at Nomura offered their review of the US data and raised their GDP tracking estimate

Key Quotes:

"Durable goods orders: Durable goods orders increased 2.2% m-o-m in September (Nomura and Consensus: 1.0%). Excluding volatile transportation equipment, new orders rose 0.7% m-o-m (Nomura: 1.0%, Consensus: 0.5%), implying strong growth in industrial activity. The recent strong recovery in demand for durable goods poses some upside risk to our economic outlook. Note that we recently revised up our forecast for business equipment investment. 

New home sales: September new home sales jumped by a strong 18.9% m-o-m to an annual rate of 667k, well above expectations (Nomura: -0.9% to 555k, Consensus: -1.1% to 554k). August and July sales were revised up modestly. It appears that sales activity picked up in the South as many consumers in the hurricane-affected areas (e.g., the Greater Houston area and a large part of Florida) are seeking replacement housing.

GDP tracking update: Orders of core capital goods were stronger than our expectations with upward revisions to previous months. Moreover, durable goods inventories were stronger than we expected. This implies better Q3 equipment investment and inventory accumulation. Finally, September’s new home sales were stronger than our expectations, implying more brokers’ commissions in residential investment during Q3. Altogether, we raised our GDP tracking estimate 0.2pp to 2.9% q-o-q saar. Note the BEA will release its advance estimate of Q3 real GDP on Friday, 27 October."