3 Numbers: Revised Q3 U.S. GDP Growth Expected To Tick Higher
James Picerno | Nov 29, 2016 01:33AM ET
- Eurozone business sentiment on track to inch up to five-year high in November
- US Q3 GDP growth projected to inch higher in today's revised data
- November's US Consumer Confidence Index set to rise to a three-month high
Tuesday’s a busy day for economic news, including an update on sentiment in the Eurozone via the European Commission’s Business Climate Indicator. Later, two US numbers will be widely read: revised Q3 GDP data, followed by The Conference Board’s November report for the Consumer Confidence Index.
Eurozone: Business and Consumer Confidence Indicators (1000 GMT): Fourth-quarter GDP growth remains on track to accelerate, expanding at nearly 0.5%, according to last week’s estimate from Now-casting.com.
PMI data also paints an upbeat profile. The flash Eurozone Composite Output Index ticked up to an 11-month high in November’s flash report. The implied GDP growth rate for Q4 is 0.4%, according to IHS Markit – a modest improvement over the 0.3% rise in Q3.
“The preliminary PMI results for November indicate the sharpest monthly increase in business activity so far this year, with plenty of signs that growth will continue to accelerate,” an economist at the consultancy advised last week.
Meanwhile, consumer sentiment in Europe has rebounded to its highest level for the year so far in November, based on the flash numbers from the European Commission. The EC’s benchmark jumped to minus 6.1 this month, the strongest reading since last December.
Today’s update will present revised consumer index numbers and offer the first look at this month's reading of the EC’s Business Climate Indicator (BCI), which has increased sharply in the past two months. The consensus forecast sees BCI inching ahead to 0.57, a five-year high, according to TradingEconomics.com.
If upbeat figures prevail in today’s release, confidence will strengthen for expecting that Q4 GDP growth will improve too.
US: Q3 GDP (1330 GMT): The broad trend for the world’s largest economy has been firming up lately, and today’s revised data for third-quarter GDP looks set to reaffirm the revival.
Econoday.com’s consensus forecast sees quarterly Q3 GDP growth ticking up to 3.1% from 2.9% (seasonally adjusted annualised rate) in the preliminary estimate. The previously published gain is the fastest in two years and today’s release is on track to add a bit more edge to the trend.
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Looking ahead to Q4, however, reflects a mixed outlook at the moment, based on a pair of estimates from two regional Fed banks. The Atlanta Fed’s GDPNow model is currently projecting that growth will rise to 3.6% in the last three months of this year, although the New York Fed’s Q4 nowcast sees a mild deceleration to 2.5%.
Meanwhile, optimism prevails in the OECD’s new economic projection, which anticipates a stronger trend for the US in 2017. The Paris-based Organisation for Economic Cooperation and Development raised its estimate for growth next year to 2.3% (up from September’s 2.1% forecast for 2017) and comfortably above this year’s projected 1.5% rise.
Perhaps, but first let’s see how today’s revised Q3 numbers compare. If the crowd is right, the data du jour could be a down payment on firmer comparisons ahead.
US: Consumer Confidence Index (1500 GMT): The mood in the consumer sector appears to be rebounding in November after an October slump.
Last week’s update of the University of Michigan’s (UoM) Consumer Sentiment Index jumped to a six-month high for this month's reading. “The initial reaction of consumers to Trump’s victory was to express greater optimism about their personal finances as well as improved prospects for the national economy,” said the chief economist of surveys at UoM.
Today’s follow-up release from the Conference Board is expected to deliver uplifting news too. Econoday.com’s consensus forecast projects that the Consumer Confidence Index (CCI) will rise to 101.0 in November, an encouraging rebound after October's tumble.
The hard data on retail spending supports a brighter mood. Real (inflation-adjusted) sales increased 2.6% in the year through October – the most since February.
If today’s CCI results match expectations, the outlook for retail activity will continue to strengthen as the holiday shopping season kicks into high gear.
Disclosure: Originally published at Saxo Bank TradingFloor.com
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