US: Focus on Q4 GDP this week – NBF

Analysts at National Bank Financial point out that in the US, the Bureau of Economic Analysis will finally publish its first estimate of Q4 GDP growth after a long delay caused by the government shutdown and will be a key economic release for today’s session. W

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“We anticipate a healthy contribution from trade, a reflection of expanding real exports and shrinking real imports. Consumption may also add to GDP but less than in previous quarters, judging from lackluster retail sales data.”

“Residential and business investment, meanwhile, could add another few tenths to the overall growth figure. Inventories, for their part, could weigh on growth in the quarter after having added no less than 2.4 percentage points in Q3, the largest positive contribution for that segment since 2011Q4.”

“All told, GDP may have expanded 2.5% in annualized term in the fourth quarter. We’ll also get housing data for December, with small decreases expected for both housing starts and building permits. In other news, personal income likely rose in January, in line with decent earnings growth. Personal spending, on the other hand, could have retraced in December if the steep retreat in retail sales during the month is any guide.”

“The annual core PCE deflator, meanwhile, may come in unchanged at 1.9%, i.e. just one tick below the Fed’s target. Also, the ISM manufacturing index could have edged down slightly in February based on the decrease recorded by Markit’s manufacturing PMI in the month. Finally, Fed Chairman Jerome Powell will deliver his semi-annual monetary policy report to Congress on Tuesday and Wednesday.”