US: 2Q GDP report set to show a decent rebound - ING
|Analysts at ING point out that this week sees the release of 2Q GDP numbers from the US and suggest that 2Q report is set to show a decent rebound thanks largely to a reversal of fortunes for consumption and inventories.
Key Quotes
“In terms of the US, 1Q GDP was very disappointing, showing growth of 1.4% annualised, which was largely attributable to poor consumer spending growth of 1.1% and a rundown in inventories, which subtracted 1.1 percentage points from the headline rate of GDP growth. The 2Q report is set to show a decent rebound thanks largely to a reversal of fortunes for consumption and inventories. We look for GDP to grow 2.8% annualised while the consensus amongst the 74 analysts surveyed by Bloomberg is growth of 2.5% (forecasts range between 0.9% and 3.2%). Business surveys suggest we should be looking for a strong rebound while healthy retail sales, firm jobs growth and durable goods orders also support this view.”
“Then we will be focusing on the jobs report. Job creation has been solid, but wages growth has been lacklustre. The Federal Reserve believes it is only a matter of time before wages respond to the tightness of the labour market, which will eventually increase inflation pressures in the economy. We look for wages to increase 0.3% MoM, the strongest reading since February, but this on its own will do little to alter the market’s mind-set that the Fed won’t be able to carry through with the four rate hikes it has suggested it will do over the next 18 months.”
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