Q3 GDP surprises to upside, but details mixed:

  • Q3 GDP growth accelerated to 2.9% from 1.4% in prior quarter. This was ahead of consensus expectations for a 2.6% increase, though tracking estimates had been moving higher into the print and some economists highlighted likelihood of an upside surprise. In addition, details mixed. Consumption increased 2.1%, down from the 4.3% gain in Q2 and below the consensus for a 2.6% increase. Consumption added just under 150 bp to headline growth. Lot of attention on 83 bp tailwind from net exports as Commerce Department highlighted outsized impact from soybean shipments. Inventories contributed 61 bp to growth. Business fixed investment a slight contributor to growth, increasing 1.2%. Big tailwind came from a 5.4% increase in the structures component. However, spending on equipment did fall 2.7% after a 2.9% decline in prior quarter. Government spending also a small positive, adding just under 10 bp to headline reading.