US third-quarter GDP growth was revised higher to 3.2% in the second release from the preliminary estimate of 2.9% and this was also above consensus expectations of an increase to 3.0%.
There was upward revision to the personal consumption expenditure (PCE) estimate, which was partially offset by a downward revision to non-residential fixed investment and inventories.
PCE was revised up to an annual rate of 2.8% for the quarter from the first estimate of 2.1% with solid increases across goods and services, although there was a slight contraction in purchases of non-durable goods.
Overall investment increased 2.1% for the quarter from the original estimate of 3.1%. Capital spending was bolstered by strength in non-residential structures, although there will be disappointment that spending on equipment declined for the fourth successive quarter with a significant downward revision to the first estimate. There was a slower estimated decline in residential investment at 4.4% from the original 6.2%.
Net exports made a positive contribution for the quarter, while government spending rose only marginally by 0.2% from the 0.5% first estimate as local government spending contracted at a faster pace for the quarter. Inventories made a positive contribution for the first time since the first quarter of 2015.
There was a downward revision to the GDP price index to 1.4% from the first estimate of 1.5%, which will slightly dampen inflation expectations.
There will be no change to expectations of a December rate hike and there is the potential for slightly greater optimism surrounding 2017, although the overall impact should be limited.
USD/JPY strengthened after the data with a break above 113.00 to 113.25, but the dollar was unable to extend gains against the Euro with EUR/USD at 1.0585. Treasuries came under pressure with 10-year futures down over 10 ticks with the yield near 2.35% as equity futures were little changed.
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