AMERICAN ECONOMY UNEXPECTEDLY ACCELERATES IN Q3

The first look at Q3 U.S. GDP growth is out.
The American economy grew 2.8% at an annualized pace in Q3, accelerating from Q2’s 2.5% pace of growth and coming in well ahead of consensus estimates for 2.0%.

Personal consumption growth slowed to 1.5% from 1.8%, however, worse than the slowdown to 1.6% predicted by economists.

The headline number was boosted by a rise in inventories.

“Private businesses increased inventories $US86.0 billion in the third quarter, following increases of $US56.6 billion in the second quarter and $US42.2 billion in the first,” said the BEA in the release.

Below is a breakdown of the data from the release:

Real personal consumption expenditures increased 1.5 per cent in the third quarter, compared with an increase of 1.8 per cent in the second. Durable goods increased 7.8 per cent, compared with an increase of 6.2 per cent. Nondurable goods increased 2.7 per cent, compared with an increase of 1.6 per cent. Services increased 0.1 per cent, compared with an increase of 1.2 per cent.

Real nonresidential fixed investment increased 1.6 per cent in the third quarter, compared with an increase of 4.7 per cent in the second. Nonresidential structures increased 12.3 per cent, compared with an increase of 17.6 per cent. Equipment decreased 3.7 per cent, in contrast to an increase of 3.3 per cent. Intellectual property products increased 2.2 per cent, in contrast to a decrease of 1.5 per cent. Real residential fixed investment increased 14.6 per cent, compared with an increase of 14.2 per cent.

Real exports of goods and services increased 4.5 per cent in the third quarter, compared with an increase of 8.0 per cent in the second. Real imports of goods and services increased 1.9 per cent, compared with an increase of 6.9 per cent.

Real federal government consumption expenditures and gross investment decreased 1.7 per cent in the third quarter, compared with a decrease of 1.6 per cent in the second. National defence decreased 0.7 per cent, compared with a decrease of 0.6 per cent. Nondefense decreased 3.3 per cent, compared with a decrease of 3.1 per cent. Real state and local government consumption expenditures and gross investment increased 1.5 per cent, compared with an increase of 0.4 per cent.

The change in real private inventories added 0.83 percentage point to the third-quarter change in real GDP after adding 0.41 percentage point to the second-quarter change. Private businesses increased inventories $US86.0 billion in the third quarter, following increases of $US56.6 billion in the second quarter and $US42.2 billion in the first.

Real final sales of domestic product — GDP less change in private inventories — increased 2.0 per cent in the third quarter, compared with an increase of 2.1 per cent in the second.

Click here for the full release »

“This GDP report should be more preliminary than usual due to the government shutdown, and the attendant delays in data releases,” says Citi economist Peter D’Antonio. “The first print of GDP growth always includes Commerce Department assumptions for missing final month readings on construction spending, inventories and capital spending. However, because of the data blackout due to the shutdown, important information on August capital spending figures also will be missing.”

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