The U.S. economic data seems to have picked up momentum according to reports from last week. Across most areas, economic reports indicate a strong surge in activity, including a revised higher third quarter GDP.
New single family home sales rose 6.2% in October.
New home sales consisting of a single family home rose by 6.2% in October, to an annual rate of 685,000. This was higher than the median consensus estimates of 627,000. In comparison to last year’s figures, new home sales rose by 18.7%, with increased activity across all the major regions in the U.S.
October’s new home sales data was the highest since 2007. The increased activity was attributed to a rebound following the hurricanes in September. Nearly all the contracts on new home constructions began surging to their highest levels since 2005.
Despite the hurricanes, the rebound was broad based with most of the major U.S. regions registering sharp growth, pushing the average pace for the three month period ending in October to the highest levels since 2007.
U.S. GDP advances 3.3% in Q3 2017
GDP data for the third quarter was revised higher to show a 3.3% annual growth rate during the third quarter ending September. This was higher than the preliminary release of 3.0%.
The revised GDP data was higher than 3.2% that was forecast by economists. The biggest contribution to the revision came from an increase in business investment, inventory and government spending. Consumer spending was however seen to have remained weaker. However, on the positive side, personal consumption was increased.
The GDP price index data was revised down from 2.2% to 2.1% nominal growth.
Core GDP was seen rising at a rate of 2.3% annual rate during the third quarter. This was higher than the previous release of 2.2% and grew at a pace of 2.5% over the past two years.
The real GDP growth including inflation was seen to be pushing higher at a rate of 5.5% on an annual basis. This was slightly higher than the 5.2% increase previously. The GDP data was consistent in showing that Fed’s plans to hike interest rates will be accepted by the economy.
Personal income rises 0.4%
Last week’s personal income data showed a 0.4% increase in October. This was revised higher from 0.3% which beat the consensus estimates of 0.3%. Personal consumption was seen rising 0.3% which was in line with consensus estimates.
Personal income increased 0.5% in October and was seen rising 3.2% from a year ago. The gains in personal income came from an increase in wages and salaries from the private sector.
U.S. nonfarm payrolls – Wage growth expected to rise
The strong data set will certainly culminate with this week’s nonfarm payrolls report. According to the estimates, the U.S. economy is expected to add 198k jobs for the month of November.
Although the headline number is forecast to be lower than the 261k registered in the previous month, the focus will be on the wage growth component. This comes amid expectations that the U.S. unemployment rate was unchanged at 4.1%.
Wages, which have remained broadly flat are expected to rise 0.3% on a month over month basis. This comes after wages stayed flat in October.
The implications of the November payrolls report is expected to be limited as the Federal Reserve cemented expectations for a rate hike in December. This comes despite the fact that inflation has remained low and below the Fed’s 2.0% inflation target rate.
However, central bank officials are pinning hopes that further tightening in the U.S. labor markets will eventually see wages and therefore consumer prices rising higher.