REPEAT: MNI DATA ANALYSIS: US 3Q GDP +3.0% Vs +2.7% Expected>

Repeats Story Initially Transmitted at 12:30 GMT Oct 27/08:30 ET Oct 27

--GDP Price Index +2.2% Vs +1.8% Expected

--Core PCE Price Index +1.3% Vs +0.9% 2Q; +1.3% Y/Y Vs +1.5% Y/Y 2Q

--BEA Says Cannot Quantify Hurricane Impact On GDP Data

By Kevin Kastner, Sara Haire, and Holly Stokes

     WASHINGTON (MNI) - Third quarter GDP rose 3.0% in the advance 

estimate, stronger than the 2.7% pace expected, with growth led by a 

stronger gain in inventories, a narrower trade gap, and positive gains 

for PCE and nonresidential fixed investment despite a decline in 

structure investment, data released Friday by the Bureau of Economic 

Analysis showed. 

     The core PCE price index rose 1.3% in the third quarter after a 

0.9% increase in the second quarter. On a year/year basis, third quarter 

core PCE prices were up 1.3% from a year earlier following a 1.5% 

year/year rise in the second quarter and a 1.8% year/year gain in the 

first quarter. The third quarter year/year pace was the slowest since 

the fourth quarter of 2015. 

     The overall GDP price index was up 2.2% in the third quarter after 

1.0% pace of growth for the second quarter, stronger than the 1.8% gain 

expected. 

     The BEA acknowledged the devastation from the hurricanes, but said 

it could not quantify the exact impact on the data. It noted that 

Hurricane Maria affected Puerto Rico and the Virgin Islands, which are 

not included in GDP estimates, no impact from Maria is reflected in the 

data. 

     Inventories were up $35.8 billion in the third quarter after a $5.5 

billion gain in the second quarter, continuing a string of gains. When 

the inventory component is removed, real final sales rose 2.3% after a 

2.9% gain in the second quarter. 

     PCE was up 2.4% in the third quarter after a 3.3% surge in the 

second quarter. The gain in third quarter PCE was led by durables PCE, 

which was up 8.3% after a 7.6% second-quarter gain. Nondurables PCE was 

up 2.1% in the third quarter compared with a 4.2% rise in the second 

quarter, while services PCE slowed to a 1.5% growth rate from 2.3% in 

the previous quarter. 

     Nonresidential fixed investment rose by 3.9% in the third quarter, 

down from a 6.7% gain in the second quarter, due in large part to a 5.2% 

decline in structures. Equipment and intellectual property investment 

were both up. 

     The net export gap narrowed to $595.5 billion for the third quarter 

from $613.6 billion in the second quarter. 

     Residential fixed investment fell 6.0% in the third quarter, after 

a 7.3% decline in the second quarter. 

     Government spending was down 0.1% in the third quarter after a 0.2% 

decline in the second quarter. 

    ** MNI Washington Bureau: Tel. (202)371-2121 **