The September U.S. factory report
The September U.S. factory report mostly tracked estimates with a gain of 0.1% for the nondurable shipments and orders measure, and a 0.1% rise for nondurable inventories, though the inventory rise was stronger than the BEA assumed in constructing the Q3 GDP figure. Analysts now expect a Q3 GDP growth boost to 2.1% from 1.9%, with a $6 B Q3 hike in factory inventories and a $3 B boost on construction. Analysts expect Q4 growth of 5% in equipment spending, and a -$15X B inventory subtraction that leaves a still-elevated $60 B accumulation rate. Analysts assume a 0.1% September business inventory rise after a -0.1% (was flat) August drop, with component swings in September of 0.3% for factories, -0.3% for wholesalers, and 0.3% for retailers. The factory data have weakened in 2019 thanks to headwinds from the global slowdown and heightened trade uncertainty, though the GDP impact has been partly offset by a solid growth path for consumption. The factory sector has faced distortions from Boeing since March and GM in both September and October. A Q4 improvement in the factory sector remains likely given the October GM strike settlement, and an assumed lifting of the 737 MAX grounding at some point before year-end.