US: Data to reaffirm the solid underlying pace of economic growth - Nomura

Analysts at Nomura expect this week’s data to reaffirm the solid underlying pace of US economic growth with healthy readings on September’s retail sales and industrial production data.

Key Quotes

“We expect elevated readings from the first manufacturing surveys of October, but see some downside risk from an escalation of trade disputes in September with the US and China imposing additional tariffs. However, we expect weak readings on housing starts and existing home sales for September, consistent with our somewhat pessimistic outlook for residential investment.”

“Incoming data last week raised our real GDP tracking estimate 0.2pp to 3.7% q-o-q saar. The core CPI in September surprised to the downside as a sharp decline in used vehicle prices and an idiosyncratic deceleration in homeowners’ equivalent rent resulted in a soft, 0.116% m-o-m increase, below expectations, keeping the y-o-y rate unchanged at 2.2%.”

“Overall, however, we remain confident in our medium-term core inflation outlook with gradual upward pressure in the light of continued labor market strength. Incorporating last week’s PPI and CPI data, we expect a steady increase of 0.155% m-o-m for September’s core PCE price index, corresponding to 1.965% on a 12-month basis.”