US Q3 GDP (second estimate): Upward revision with higher consumption - Natixis
|Research Team at Natixis, notes that the US GDP was revised from 2.9% to 3.2% ar in Q3-16 (slightly higher than expectations) and was driven largely by private consumption and to a lesser extent investment in structures.
Key Quotes
“On the other hand, revisions were slightly negative for investment in equipment and intellectual property. The contributions of residential investment, net exports and change in inventories were little changed. After two quarters of decline, corporate profits increased meaningfully in Q3. Looking forward, available statistics suggest that GDP growth will keep growing at a steady pace in Q4.
- GDP growth was revised to 3.2% QoQ at annual rate in Q3 2016 in the second estimate after 2.9% in the first estimate, slightly higher than expectations (consensus and Natixis: 3.0%). Most of the upward revision was driven by higher private consumption. Fixed investment was revised slightly lower as the downward revisions of investment in equipment and intellectual property outweigh the upward revision of investment in structures. The contributions of residential investment, net exports and change in inventories were little changed. Real domestic final sales were revised upward from 2.3% to 2.7%.
- After two quarters of decline, the profit rate rose from 11.0% to 11.5% of GDP in Q3.
- In short, the upward revision of Q3 GDP is encouraging as it is not driven by volatile components but by consumption. On the other hand, the details of fixed investment is still mixed. Looking forward, available statistics (October retail sales, housing starts, ISM indexes…) suggest that GDP will keep growing at a solid pace in Q4. In the near term we still expect growth to remain slightly above its potential.”
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