It seems like it was only Friday that Goldman's daily GDP forecast adjustment team revised its GDP lower. Oh wait, it was [3]. Since it is another day ending in -y, here comes Hatzius' crack commando team with yet another downward revision.
Construction spending -0.6% (mom) for August vs GS +1.0%, median forecast +0.5%.
MAIN POINTS:
1. The ISM manufacturing index rose more than expected to 51.5 from 49.6 (vs. consensus of 49.7). The underlying composition was also friendly, with increases in new orders (up 5.2 points to 52.3), production (up 2.3 points to 49.5), employment (up 3.1 point to 54.7), and supplier deliveries (up 1.0 point to 50.3). The new orders/inventories gap also improved from -5.9 to 1.8 as inventories dipped 2.5 points to 50.5. This report is somewhat reassuring after weak durable goods and the Chicago PMI last week.
2. Construction spending disappointed with a 0.6% drop in August, with nonresidential construction down 1.3% and residential up 0.9%. This lowered our Q3 GDP tracking estimate to 1.8% from 1.9%.
And this despite the massive short cover inducing Mfg ISM? One of these days Goldman's economic exuberance (this number was 2.3% three weeks ago) will play out though, you'll see.