US: Focus on consumer sentiment and business inventories – Nomura
|Analysts at Nomura suggest that the incoming US data on inventory spending point to a healthy gain in aggregate business inventories in July.
Key Quotes
“The build-up of inventories was especially strong in the manufacturing and wholesale sectors. Retail inventories also increased at a healthy pace, driven by a decent gain in retail auto inventories. Altogether, we expect a solid contribution from private inventory accumulation to real GDP growth in Q3.”
“University of Michigan consumer sentiment: Consumer sentiment in the University of Michigan August survey has declined 5.2pp from its recent peak of 101.4 reached in March, in contrast to the Conference Board’s survey which has showed continued improvement.
As inflation expectations have risen this year, it is possible that respondents in the Michigan survey have discounted recent income growth in real terms, in contrast with the Conference Board’s questions which focus on nominal income growth expectations and labor markets, indicating perhaps more modest consumer spending growth than what the Conference Board survey would suggest.
Inflation expectations at the one-year horizon increased 0.1pp to 3.0% while longer-term inflation expectations remained within a steady range, increasing 0.2pp to 2.6% in August.”
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