US: Q1 GDP Disappoints but Household Details Show Promise – Nomura
Research Team at Nomura, notes that the Bureau of Economic Analysis
(BEA) reported that US real GDP grew by 0.5% q-o-q in Q1 2016, slightly
below expectations (Nomura and Consensus: +0.7%).
“The details of the report point to a slowing in domestic economic momentum from Q4, with real final sales growth decelerating to 0.9% q-o-q from 1.6% previously.
The slowdown was broad-based, with personal consumption contributing less to growth in Q1, and business fixed investment and net trade both weighing more on GDP growth in Q1 than Q4. The “hard” data on industrial activity have signaled a sustained laggard pace of activity throughout the end of the Q1 and suggest that activity in the industrial sector could be weak to start Q2. On the flip side, fundamentals on the consumer remain solid, and should set the stage for a bounce back in consumer spending in Q2.
The bright spot of this GDP report was residential fixed investment, which increased by 14.8%, well above our forecast of an 8.2% increase and the highest increase since Q4 2012.
The Q1 GDP report continued to reflect the theme of the past year - consumer and housing sectors providing most of the growth, while the industrial side continues to retrench in reaction to challenging global and financial conditions. Moreover, although some of the acceleration in residential investment may have been temporary, it still provides a good sign for the state of household finances.”