The composition of growth bears watching....>

US DATA: The composition of growth bears watching in the Q2 GDP advance estimate

Friday. Analyst consensus for the headline figure is 4.2% Q/Q ann.

- The Atlanta Fed`s Q2 Nowcast estimate released Thursday is 3.8%. While the

Nowcasts have a mixed record, they imply that the tax cuts signed in December

are having only a marginal boost for investment so far.

- Net exports and government spending (each contributing 0.6 percentage points

to headline GDP per Atlanta Nowcast), plus private consumption (+2.2pp to

headline), look to have propelled GDP, with faster growth vs recent history.

- With companies apparently accelerating exports to avoid tariffs, Nowcast

projects net exports contributed 0.6 percentage points to real GDP, versus the

-0.2pp on average in the previous four quarters. This looks unsustainable.

- Missing from the picture is a decisive surge in business investment, which by

the Atlanta Fed`s estimate to have slipped in Q2 to a 0.7pp contribution, from

0.9pp on average in the previous 4 quarters and the lowest since Q317.

- Consensus is for 2.8% Q/Q average GDP expansion in H2, with an acceleration in

investment and a slowdown in net exports.