US: Focus on consumption and industrial output sector this week - BBH

Analysts at BBH suggest that investors will get updates on two sectors of the US economy that were particularly strong in Q4 17:  consumption and industrial output.  

Key Quotes

“Headline retail sales may have slowed to 0.2%.  Note that it rose by an average of 0.7% a month in Q4 a 0.8% average in Q3.  These are unusually strong readings and simply cannot be sustained.  That said, GDP-component may have slowed after averaging 0.75% in Q4 but may remain elevated near Q3's average monthly of 0.5%.”

“The strength of the US industrial sector is not fully appreciated.  At an annualized pace, its growth exceeded 8.5% in the last three-months of 2017.  It was the best quarter in seven years.  The recovery from the storm provided extra demand.  It is likely to have begun normalizing with a monthly gain of around 0.2% in January.  Manufacturing had eked out a modest 0.1% gain in December, which may overstate the slow.  The market is looking for a 0.3% increase, which would still be a touch less than January 2017.”

“Still, overall the US growth impulses appear to be carrying over into 2018, though important trade and inventory data are not available.  The first look at February comes from the Empire and Philly Fed surveys due in the week ahead.  The Atlanta Fed GDPNow sees the US economy tracking 4.0% annualized growth in Q1, while the NY Fed's model is at 3.3%.”