30 Jan 2015
US 4Q GDP disappoints, net exports big drag - ING
FXStreet (Barcelona) - Rob Carnell of ING comments on the US GDP release, noting that the worsening net trade balance stripped of over 1.0pp from the GDP figure which registered a 2.6% growth.
Key Quotes
“The first release of 4Q14 US GDP came in at 2.6% against consensus expectations of 3.0% (ING f 2.9%). The room for forecasting error with these advance prints is huge, so most forecasters will be treating these numbers as “on target”. And there is not too much to have to make excuses for.”
“Personal consumption registered a 4.3% increase up from 3.2% in 3Q14, not bad considering the December slowdown in retail sales, with strong growth in both goods and services. But it was a sorrier story in the investment sector, where fixed investment rose at only a 2.3% rate, down from 7.7% in 3Q, and a drop of 1.9%QoQ in business investment undermining the strong 3Q figures.”
“Unsurprisingly, the government sector reversed its 3Q 4.4% increase, dropping by 2.2%, as the contribution from the defence sector changed sign.”
“And the biggest surprise was another large contribution to growth from inventories, which helped to offset the sharp rise in imports and substantial worsening of the net trade balance (-$471.5 from -$431.4). This alone stripped off just over 1.0pp from the GDP figure, though inventories added back 80% of that.”
“Perhaps equally interesting today was the employment cost indicator for 4Q14 given the recent surprise fall in wages in the latest labour market report. Sadly, the ECI report contained no “smoking guns”. But instead, the wages and salaries component registered a small decline.”
“For a not very timely quarterly series, it is a push to infer much from this for the next labour report. Though we remain optimistic that we will see some more signs of life from wages before long.”
Key Quotes
“The first release of 4Q14 US GDP came in at 2.6% against consensus expectations of 3.0% (ING f 2.9%). The room for forecasting error with these advance prints is huge, so most forecasters will be treating these numbers as “on target”. And there is not too much to have to make excuses for.”
“Personal consumption registered a 4.3% increase up from 3.2% in 3Q14, not bad considering the December slowdown in retail sales, with strong growth in both goods and services. But it was a sorrier story in the investment sector, where fixed investment rose at only a 2.3% rate, down from 7.7% in 3Q, and a drop of 1.9%QoQ in business investment undermining the strong 3Q figures.”
“Unsurprisingly, the government sector reversed its 3Q 4.4% increase, dropping by 2.2%, as the contribution from the defence sector changed sign.”
“And the biggest surprise was another large contribution to growth from inventories, which helped to offset the sharp rise in imports and substantial worsening of the net trade balance (-$471.5 from -$431.4). This alone stripped off just over 1.0pp from the GDP figure, though inventories added back 80% of that.”
“Perhaps equally interesting today was the employment cost indicator for 4Q14 given the recent surprise fall in wages in the latest labour market report. Sadly, the ECI report contained no “smoking guns”. But instead, the wages and salaries component registered a small decline.”
“For a not very timely quarterly series, it is a push to infer much from this for the next labour report. Though we remain optimistic that we will see some more signs of life from wages before long.”