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US Q3 and Q4 GDP Will Be Above Expectations

Data published yesterday suggest that Q3 GDP will be revised upward on December 5th. It is very likely that the figure will be above 3% (QoQ Annualized) following the upward revision of total business inventories in August and a stronger than expected rise in September. Moreover, in the same time, the revision of September retail sales was also positive.


According to Census, total business inventories rose 0.6% MoM in September (against 0.3%e MoM) while August data were revised from +0.3% MoM to 0.4% MoM. On the other hand, retail sales were revised in September from +0.3% MoM to 0.4% MoM.


In the meantime, retail sales were largely above expectations in October at +0.4% MoM (against +0.1%e MoM) which confirms that the impact of government shutdown was limited. As a consequence, the consensus should rise its expectations of a 2% (QoQ Annualized) growth in Q4.


These figures show that economic situation has improved since the last FOMC meeting so that 2013 forecasts set in September should be met.

Francois Hollande’s Approval Rating Falls To A Record Low

A YouGov poll for the Huffington Post and i>TELE published today shows that Francois Hollande’s approval rating hits new lows, losing six percentage points in a month with only 15 percent of respondents now backing his actions.


More from Business Standard:


Asked how they judged Hollande’s actions as president three percent of respondents said they had a very positive opinion and 12 percent said it was positive.
Seventy-six percent said they had a rather negative or very negative opinion. Nine percent would not comment.
The downturn follows the exposure of record unemployment, rising taxes and weak growth amid a growing nationwide feeling of despondency due to job cuts and factory closures.


It is very likely that Hollande’s Approval will fall again after a report shows that GDP contracted 0.1% in Q3 and a potential strike of football clubs could lead to discontents.

Eurozone Q3 GDP Forecasts

Several indicators which can be used to forecast Eurozone Q3 GDP were published this week:


1/ Belgian economy grew 0.3% QoQ in Q3 (strongest since Q1 2011).

2/ Spanish GDP increased 0.1% QoQ in Q3 (first rebound after nine quarters of contraction).

3/ French consumer spending unexpectedly fell in September and in Q3.


4/ German real retail sales unexpectedly declined for a second straight month in September.

As a consequence, we can build our scenarios with a cautious approach regarding French and German contributions. By taking into account the weight of each economy in the euro area (Germany: 27%; France: 21%; Italy: 18%; Spain: 12% and Belgium: 5%), we get the following forecasts:


Growth Forecasts
Scenario Pessimistic Central Optimistic
Germany 0.2% 0.3% 0.4%
France 0.1% 0.2% 0.3%
Italy -0.1% 0.0% 0.1%
Spain (1st publication) 0.1% 0.1% 0.1%
Belgium (1st publication) 0.3% 0.3% 0.3%
Others 0.0% 0.1% 0.2%


Growth Contributions
Scenario Pessimistic Central Optimistic
Germany 0.054% 0.081% 0.105%
France 0.021% 0.042% 0.063%
Italy -0.018% 0.000% 0.018%
Spain (1st publication) 0.012% 0.012% 0.012%
Belgium (1st publication) 0.015% 0.015% 0.015%
Others 0.000% 0.017% 0.034%
Total 0.084% 0.0167% 0.0230%
Total (rounded) 0.1% 0.2% 0.2%


In the central scenario, based on the main central banks’ expectations, Eurozone growth could reach 0.2% in Q3 2013.

BOI Quarterly Economic Bulletin: Italian Growth Stabilized in Q3 and Might Expand in Q4

After declining by 0.6% and 0.3% QoQ in Q1 and Q2, BOI Quarterly Economic Bulletin notes that last opinion surveys indicate that Italian growth stabilized in Q3 and should rebound in Q4.


This improvement is due to a recovery in exports which has been accompagnied by signs of more favourable investment environment. At the opposite, consumer spending continues to be held back by the weakness of disposable income in a context of rising unemployment rate.


Note that even if business surveys point to a gradual improvement in the coming months, the high dispersion of firms’ expectations concerning their own economic situation suggests the recovery is fragile and not broadly based.


The Quarterly Economic Bulletin is available here. (page 16-38)