The second estimate of Q3 annualized GDP growth for the United States was revised up to 2.7% from the 2.0% that was reported in the first estimate. This was slightly below market expectations of an upward revision to 2.8%. These expectations were largely based on indications of even stronger inventory and export numbers that were reported following the release of the first estimate of Q3 growth.
Such was confirmed in today’s report with the change in inventories adding an even greater than expected 0.9 percentage points to growth. The add from exports of 0.4 pp was more in line with expectations going into the report.
Less anticipated was the downward revision to consumer spending growth to 1.4% from the 2.0% previously reported. This subtracted 0.4 pp from the Q3 growth rate. As well, investment in equipment and software is now showing a decline of 2.7% rather than unchanged activity as was reported in the initial estimate of Q3 GDP. The greater weakness in consumer spending and investment contributed to growth in final sales to domestic buyers being cut to a modest 1.7% from the 2.3% previously reported.
In a separate report out this morning jobless claims for the week ending November 24 fell to 393,000 from 416,000 the previous week (revised up from 410,000). The level was slightly higher than the 390K expected within financial markets going into the report. The data in recent weeks have been upwardly affected by Superstorm Sandy that hit the U.S. northeast late in October.
As well, the data in the latest week may have been impacted by the Thanksgiving holiday. This has contributed to the four-week moving average of claims rising for the fourth consecutive week to 405,250 from 397,750 last week and a recent low the week of October 27 of 367,250.
Experts at RBC Economics declared this morning, "we expect that the impact from the storm will continue to ease through the end of the year. However, with the claims data pointing to only a gradual easing of the impact the risk is increasing that the storm may have a more material impact on payroll employment with the November report out next Friday likely to show a slowing from the 171,000 recorded for October."
