Analysts at Nomura noted the key US data overnight and reviews ISM manufacturing index, Construction spending and offered their US GDP Q3 tracker update.
"ISM manufacturing index: The ISM manufacturing index rose 2.0pp to 60.8 in September, from 58.8 in August, above expectations (Nomura: 58.0, Consensus: 58.1). Overall, the September report indicated modest improvement in activity despite the recent hurricanes. However, disruptions to supply chains were material and likely distorted the report.
Construction spending: Construction spending rebounded in August, increasing 0.5% m-o-m. However, July’s reading was revised downwards to a 1.2% m-o-m decline (previously 0.6% m-o-m decline). Private sector construction spending increased 0.4% m-o-m, with private residential increasing 0.4% and nonresidential 0.5%. Private home improvement spending increased 0.5% m-o-m in August, the fourth consecutive monthly increase. Private nonresidential construction spending rebounded in August after two months of declines. Public construction spending increased 0.7% in August, with strength in both residential (+1.1%) and nonresidential (+0.7%) construction. However, within public nonresidential construction spending, highway & street (-1.3%) and commercial (-5.6%) both continued to show weakness.
GDP tracking update: Private single-family construction expenditures were slightly weaker than our expectations, implying less residential investment in Q3. Moreover, weaker-than-expected state and local government construction slightly lowered our Q3 contribution from government. However, private nonresidential construction was stronger than our expectations, implying more investment in nonresidential structures in Q3. Altogether, we raised our GDP tracking estimate by 0.1pp to 2.5% q-o-q saar."
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