Analysts at Nomura reviewed the key data from the US session and offered their GDP tracking update for the US.
Key Quotes:
“Initial jobless claims: Initial claims fell slightly by 2k to 212k, close to historical lows, during the week ending 11 August. Continuing claims fell 39k to 1721k for the week ending 4 August. While weekly readings can be volatile, continued low readings appear consistent with the healthy labor market.
Philly Fed survey: The Philly Fed manufacturing survey showed a sharp decline in August to 11.9 from 25.7, the lowest reading in 21 months, indicating some pullback in growth in the region. The August Philly Fed report stands in contrast to the Empire State survey that showed improving manufacturer sentiment in New York State. However, while the Empire State survey remained elevated, a supplemental survey indicates elevated concern and expectations among many respondents that trade policy changes will negatively affect profitability in 2018-19.
Housing starts: Housing starts came in at 1168k saar in July, below expectations (Nomura: 1220k Consensus: 1260k) and up only a modest 0.9% m-o-m from a downwardly revised 1158k in June (previously reported as 1173k). Both single-family (+0.9%) and multifamily housing starts (+0.7%) did not rebound robustly in July after sharp declines in June. Regionally, the West continued to weigh on aggregate housing starts, but the recent slowdown in the West was likely due to transitory factors. Incoming data suggest that sales activity and residential construction will remain a drag on GDP growth in Q3.
GDP tracking update: Weaker-than-expected housing starts in July and downward revisions to previous months suggest more drag from residential investment on real GDP growth in Q2 and Q3. After rounding, however, our tracking estimates remain at 3.9% qo-q saar for Q2 and 3.1% for Q3.”
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