Q3 GDP, advance estimate preview - Nomura

Analysts at Nomura offered a preview of the key Q3 GDP, advance estimate.

Key Quotes:

"In the advance estimate of Q3 real GDP, we expect the BEA to report growth of 2.9% q-o-q saar (Consensus: 2.6%). Despite the negative impact from the recent hurricanes, we think the US economy continued to grow above potential in Q3. Incoming data on personal spending suggest steady growth. On the business side, reflecting healthy growth in new domestic orders of core capital goods, we expect steady gains in equipment investment. Inventory investment likely contributed strongly to Q3 growth as businesses build up inventories in the face of better demand."

"Although the recent hurricanes may have disrupted production in affected areas, incoming data suggest resilient growth in inventory investment. Further, exports in recent quarters have been strong. We expect this trend to have continued in Q3, reducing the drag from net exports, despite hurricane-related disruptions to global shipments."

"On the downside, we expect some drag from business investment in structures, likely reflecting the negative impact from the hurricanes, tighter credit standards for commercial real estate loans, and plateauing oil and gas well drilling activity. Residential investment likely remained sluggish in Q3. Residential construction has been soft, constrained by a lack of developable lots and skilled labor. Further, the recent hurricanes severely interrupted housing sales activity in August and September, lowering our expectations on brokers’ commissions."