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%).
Key Quotes
“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.”
