US domestic demand set to post another solid rise

Incoming data on US' housing remain consistent with further modest improvement in the sector, with September housing starts rising to 1.2mn units and existing home sales reaching 5.55mn; both are just short of recovery-level highs. 

"US real private consumption growth is likely to be at 3.5%. Despite weak September retail sales, other data, including auto sales, point to robust consumer spending", says Barclays. 

Residential investment is likely to expand by 8.0% in Q3 and to contribute 0.3pp to growth. The recovery in housing is expected to continue despite the anticipated onset of monetary tightening as further labor market improvement should support household formation and given the ongoing easing in standards for mortgage loans.

"Elsewhere, solid growth is likely in equipment and IP investment to result in private fixed nonresidential investment growth of 6.7% in Q3", added Barclays.