Economic wrap: US GDP Q3 expectations can't be relied upon - Westpac

Analysts at Westpac offered an economic wrap.

Key Quotes:

"US GDP beat expectations at 2.9% growth in Q3 but a good amount of that growth came from net exports and inventories neither of which can be relied upon in coming quarters. Personal consumption contributed 1.5ppts to growth, less than many assumed, but larger positive offsets were delivered by inventories and net exports, each adding a +0.6ppts and +0.8ppts respectively. Elsewhere there were no significant surprises, investment still soggy with a flattish +0.15ppts contribution, mainly due to the weak energy patch while housing detracted 0.25ppts.

Employment Cost Index was also non-threatening with a 0.6% rise. Within that benefits jumped 0.7% - the largest rise for several years - but that is a lumpy component. Wages and salaries rose just 0.5% - the softest since Q4 last year - leaving the underlying "core" part of wages very subdued.

Economic Event Risks Today

NZ has building permits for Sep, volatile from month to month but overall reflecting strong activity. ANZ business confidence will be inspected for inflation-related indicators for any signs expectations are finally starting to rise.

Australian private credit should rise 0.4% again in Sep. Currently experiencing a loss of momentum ahead of boost from RBA rate cuts.

Eurozone Q3 GDP should report another 0.3% gain. Momentum has slowed after a robust start to year.

US personal income and spending should be solid. Core inflation pressures are running at a robust pace near target."