US: Q2 GDP likely to print 4.6% – Nomura

Analysts at Nomura are forecasting a robust 4.6% q-o-q saar real GDP growth for Q2 of US economy, mostly driven by solid contributions from personal consumption, non-residential fixed investment, and government consumption.

Key Quotes

“Consistent with the strong labor market, personal consumption expenditure likely rose solidly in Q2 after a lull in Q1. Investment in nonresidential structures likely continued to grow at a healthy pace, in line with the Q2 Senior Loan Officer Opinion Survey, which implied that lending standards on nonfarm nonresidential commercial real estate loans eased in Q2.”

“Moreover, elevated shale oil and gas extraction activity likely boosted oil-related structures investment. In addition, federal government spending likely rose solidly considering higher defense spending during Q2.”

“Residential investment, however, likely remained as a drag as sales activity softened and outlay on home improvement and mobile homes weakened. Moreover, incoming data on net defense outlay and state and local public construction outlay point to a solid pickup in federal and state & local government spending in Q2.”

“In addition, trade deficit narrowed significantly in April and May, pointing to significant boost from net exports to real GDP growth. Some of the narrowing in trade deficit, however, was led by a transitory surge in soybean exports ahead of retaliatory tariffs by US trading partners which will likely wane in coming months.”

“Note the BEA will release the “comprehensive revision” of the National Income and Product Accounts along with its advance estimate for Q2 GDP. Annual revisions for monthly Personal Income and Outlays tables will be released on 31 July with June data.”