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Nomura’s Q3 real GDP tracking estimate of US economy stands at 3.3% q-o-q saar, consistent with the strong momentum in the economy and analysts at Nomura suggest that key data on business and consumer spending, scheduled for release this week will likely reaffirm strong economic growth.

Key Quotes

“For ex-transportation durable goods orders, we expect a healthy 0.6% m-o-m gain which would be consistent with healthy industrial activity. For August personal spending, we expect a steady 0.4% gain as the strong labor market and the recent tax cut remain supportive for healthy personal consumption growth.”

“In an otherwise strong economy, housing market data continue to show signs of weakness. While housing starts rebounded strongly in August after weak readings in previous months, the strong gain appears unsustainable considering significant supply related challenges. Existing home sales remain constrained by lower turnover in the market as rising home prices and higher mortgage rates affect both supply and demand. Slower sales activity will continue to lower residential investment in the near term.”

“In the months ahead, the hurricane season will increase uncertainty around our forecasts. For the housing sector, natural disasters such as wildfires and severe storms tend to suppress concurrent construction activity but following recovery efforts boost growths in following quarters. Severe storms will affect a wide range of other economic indicators such as average hourly earnings, unemployment claims, and industrial production. However, previous episodes suggest that the net impact on current quarter GDP will likely be only modestly negative. Incoming data in the months ahead will help us assess the impact of Hurricane Florence, which made landfall last week.”