Today's U.S. reports
Today's U.S. reports revealed a welcome September ISM bounce to 51.5 from a 7-month low of 49.4 in August. Yet, analysts still expect the ISM-adjusted average of the major surveys to fall to the 49 expansion-low from in January and February, which suggests a continued inventory headwind in Q3. More importantly, analysts saw a 0.7% August construction spending drop after downward revisions that left big downside surprises for nonresidential and public construction and a troublesome 5-month string of declines for the bellwether new residential construction component. Analysts lowered our Q3 GDP growth estimate to 2.5% from 2.8%. Analysts're seeing a 4% September bounce in the available vehicle sales figures for September however that should combine with a 6% gasoline price surge to allow a 0.7% September headline retail sales rise and a firm 2.7% Q3 real consumption pace.