US: Focus on construction spending and vehicle sales data – Nomura

Analysts at Nomura explain that the US construction spending in 2018 has slowed notably from a brisk Q4 2017 pace that was likely bolstered in part by hurricane recovery efforts.

Key Quotes

“February construction spending increased only 0.1% m-o-m after a flat reading in January. That said, private single-family construction spending increased firmly through January and February, while private residential spending on home improvements weakened. Public construction spending declined 2.1% in February after increasing for the past six months. In March, public construction spending may bounce back somewhat but we expect overall construction spending to increase only modestly.”

“Vehicle sales: For April, we expect sales to slow to 16.8mn saar units. Vehicle sales surprised to the upside in March, increasing to an annualized pace of 17.4mn saar from 17.0mn saar. However, we think this increase is unsustainable as it was likely boosted by transitory factors rather than a fundamental change in demand. Given structural factors such as highly elevated incentive spending, tight lending standards on auto loans, and rising borrowing costs, we expect vehicle sales to slow gradually in 2018.”