Wtih the preliminary estimate of Q2 GDP behind us, we can focus more on Q3 data. But the sharper than expected drop in Q2 inventories (of course subject to revisions)--$141.1 bln after $113.9 bln in Q1, leaves it in a good position to make a positive contribution to Q3 GDP. As long as inventories fall less than $141 bln, it will be bolster GDP, even if inventories are not re-stocked. Indeed, if they do stabilize, then it could contributre mightily to GDP. We continue to believe that a positive Q3 GDP read is the most likely scenario.
Meanwhile, the July Chicago PMI was a bit stronger than expected at 43.4 from 36.3 and median guestimates of 42.4. This is the strongest reading in 10 months. The rise of new orders is promising. The employment index rose to 35.3, the highest since Jan. At most it points to a minor slowing of job cuts. The July Milwaukee NAPM was a bit disappointing; declining from 50 to 45. The market hoped for a 52 print.
Nevertheless, the overall string of constructive economic data will likely carry into at least the early part of next week. On Monday the national ISM for manufacturing will be released and the expected 46.5 reading, up from 44.8 in June is consistent with some growth, The same day, the US will report July auto sales were should be among the best of the year thus far near a 10 mln unit pace.
US equities have surrendered their early gains and the greenback is near the lows of the day, but traders lack conviction at the present. The 11:00 EST/15:00 GMT end of month fix is awaited.
Meanwhile, the July Chicago PMI was a bit stronger than expected at 43.4 from 36.3 and median guestimates of 42.4. This is the strongest reading in 10 months. The rise of new orders is promising. The employment index rose to 35.3, the highest since Jan. At most it points to a minor slowing of job cuts. The July Milwaukee NAPM was a bit disappointing; declining from 50 to 45. The market hoped for a 52 print.
Nevertheless, the overall string of constructive economic data will likely carry into at least the early part of next week. On Monday the national ISM for manufacturing will be released and the expected 46.5 reading, up from 44.8 in June is consistent with some growth, The same day, the US will report July auto sales were should be among the best of the year thus far near a 10 mln unit pace.
US equities have surrendered their early gains and the greenback is near the lows of the day, but traders lack conviction at the present. The 11:00 EST/15:00 GMT end of month fix is awaited.
Thoughts About Q3 GDP
![Thoughts About Q3 GDP]()
Reviewed by Marc Chandler
on
July 31, 2009
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