US GDP Q2 tracking update higher - Nomura

Analysts at Nomura offered their GDP tracking update after yet another busy day in the US calendar overnight.

Key Quotes:

"Manufacturing inventories were unchanged in March while the BEA had assumed a 0.3% m-o-m increase. This is negative to inventory investment of GDP in Q1. A small upward revision to core capital goods shipments for March, a proxy of equipment investment of GDP, was positive but not enough to offset the negative impact from inventory data. As a result, our Q1 GDP tracking estimate was revised lower by 0.2pp to 0.5% from 0.7% previously. 

However, less inventory build-up in Q1 sets the stage for more output in Q2. Moreover, core capital goods orders for March which is a leading indicator of business investment was revised up to 0.5% m-o-m from 0.2%, suggesting more business expenditure on equipment. 

Overall, the March factory orders report, combined with better-than-expected retail trade balance and more inventory build-up in autos from the trade balance report, pushed up our Q2 GDP tracking estimate by 0.3pp to 3.5% from 3.2%."