The final real GDP growth for the third quarter was revised up to 4.4%, an improvement on the initial estimate of 4.3% and notably higher than the second quarter’s final reading of 3.8%. This upward revision mainly reflects stronger-than-expected exports and investment, although consumer spending was revised downwards slightly.

Key components of the Q3 GDP growth include increases in consumer spending, exports, government spending, and investment. Specifically, contributions to GDP in percentage points were as follows:

– Government spending: +0.38
– Net exports: +1.62
– Inventories: -0.12
– Fixed investment: +0.15
– Services: +1.7 (with healthcare alone contributing +0.75)
– Goods: +0.64

Additional data show consumer spending rose by 3.5%, up from 2.5% previously. Corporate profits after tax for Q3 increased by 4.7%, while final sales rose by 4.5%, slightly below expectations of 4.6%.

Inflation metrics related to GDP also came in varied. The GDP deflator matched expectations at 3.8%, but core Personal Consumption Expenditure (PCE) prices were slightly lower than expected at 2.9% (versus 2.9% expected), and overall PCE prices came in at 2.8%, just under forecasts.

It is important to note that this data is becoming stale, as we are now three weeks into the fourth quarter and analysts are beginning to consider how Q4 might shape up. The Atlanta Fed’s GDPNow tracker recently increased its growth estimate for Q3 to 5.4% from 5.3%, although some remain sceptical, largely due to data disruptions caused by the recent government shutdown.

Forex traders should be aware that strong export numbers and fixed investment can support the currency in the short to medium term, while mixed consumer spending and inflation figures may lead to cautious central bank policies.

Original Source: Adam Button of investinglive.com