Weekly Data Analysis: A Strong Q4 GDP Print
US data released in the past week confirmed our positive view on the trajectory of the US economy, with real GDP growth remaining robust in the fourth quarter of last year, strong personal spending in December despite weak income growth, and consumer confidence remaining fairly strong in January. While we saw a marked slowdown in durable goods orders in December, we believe that this data point is something of an aberration and expect stronger growth in durables purchases going forward. The trend in initial and continuing jobless claims remains consistent with our view for additional labour market tightening, although we acknowledge this may be somewhat erratic at times due to fluctuations in labour force participation.
Next week will see the ISM manufacturing and non-manufacturing indices for January (February 3, 5), as well as factory orders and the trade balance for December (February 4, 6). Nonfarm payrolls and the unemployment rate for January will also come out at the end of next week (February 7), and we expect a much stronger payrolls figure than the 74,000 reported in December. Indeed, we believe there is a considerable possibility that the December figure will be revised up substantially.
Real GDP growth came in at a seasonally-adjusted, annualised rate (SAAR) of 3.2% in Q413, and while this represents a slowdown from 4.1% growth in Q3, we believe it reflects a continued strengthening trend in the US economy throughout last year. Real personal consumption expenditure growth steadily increased from Q1 onwards, as did real GDP growth excluding fluctuations in inventories. We broadly expect these trends to continue into 2014 and forecast 2.8% real GDP growth this year, up from what appears to have been 1.9% growth in 2013 as of the advance estimate of Q4 growth (see 'Strong Q4 Points To 2014 Pickup', January 30).
|Strong Real GDP Growth In Q413 Bodes Well For 2014|
|US - Real GDP & Personal Consumption Expenditure, SAAR % chg|