US: Above-trend growth to continue in 2018 – Nomura

Analysts at Nomura note that the advance estimate of US Q2 real GDP growth came in at 4.1% q-o-q saar, mostly in line with their and market expectations (Nomura and Consensus: 4.2%), following an upwardly revised 2.2% reading in Q1 (previously reported as 2.0%).

Key Quotes

“The robust growth in Q2 is the fastest pace since near-5% growth in Q2 and Q3 2014. The magnitude of the comprehensive revisions, which incorporate new source data and methodological changes, was relatively minor.”

“Between Q1 2012 and Q1 2018, real GDP increased at an average annualized rate of 2.2%, unchanged from the BEA’s previous estimates.”

“Report is consistent with an economy growing well above trend, with an average annualized growth rate of 3.1% in H1 2018. With nonfarm payroll growth averaging a robust 218k in Q1 and 211k in Q2, employment data appear consistent with this view.”

“The details of the GDP report were, on net, in line with our expectations and we maintain our 3.2% forecast for Q3 real GDP growth.”