US: Q3 GDP estimate raised to 3.2%, higher than expectations - Nomura

Research Team at Nomura, notes that the Bureau of Economic Analysis (BEA) raised US Q3 GDP to 3.2%, higher than expectations (Nomura, Consensus: 3.0%), from the prior estimate of 2.9%.

Key Quotes

“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 non-residential 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.”