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Analysts at Nomura explained the key data results form the US economy and calendar overnight and offer their GDP tracker update.

Key Quotes:

“Initial jobless claims: Initial claims for the week ending on 15 September declined by 3k to 201k, marking the lowest reading since November 1969. The 4-week average continued to decline to 206k from 208k in the previous week. The continued downtrend in initial claims likely reflects persistent improvement in the labor market. Continuing claims declined to 1645k for the week ending 8 September. In the coming weeks, however, jobless claims will pick up due to Hurricane Florence, but those increases would likely be transitory.”

“Philly Fed survey: The Philly Fed manufacturing survey index for September jumped 11.0pp to 22.9 in September, above expectations (Nomura: 15.0, Consensus: 18.0). The strong gain follows a sharp 13.8pp drop in August. The new orders index advanced 11.5pp to 21.4 and the shipments index rose 3.0pp to 19.6. These readings suggest that strong domestic demand remain supportive for manufacturers’ sentiment despite uncertainties on trade policies. Consistent with the robust momentum in the economy, employment indicators improved further from their already lofty levels. Six-month ahead business conditions index and capital expenditures index still remain elevated in August albeit lower than the levels earlier this year. That said, the recently announced 10% US tariffs on additional Chinese goods effective on 24 September could dampen forwardlooking elements in the October survey.”

“In addition, prices paid index dropped sharply by 15.4pp to 39.6, indicating easing of inflationary pressure on input costs. The easing likely reflects the recent plateauing in key commodity prices such as crude oil and steel. Also, aluminum prices have trended down since the imposition of US tariffs on steel and aluminum. The prices received index also decreased sharply by 13.6 points to 19.6.”

“Existing home sales: Existing home sales for August remained flat at 5.34mn saar, slightly below expectations (Nomura: 5.36mn, Consensus: 5.37mn). Both single-family home and condos/co-op sales were unchanged from their levels in July. Slowing sales suggest demand could weaken amid deteriorating home affordability. Moreover, rising mortgage rates and housing prices appear to be pushing down housing market turnover, which will continue to constrain future home sales.”

“GDP tracking update: Existing home sales in August were slightly weaker than our expectations, indicating a sharper decline in brokers’ commissions in Q3 which are a component of residential investment. After rounding, we lowered our real GDP tracking estimate by 0.1pp to 3.3% q-o-q saar.”