Today’s Q2 GDP growth came in at 4.4%, y/y, which was higher than the consensus forecast of some 3.5%, and our even softer estimate of 2.5%. Growth was driven by private consumption, government spending (notably investment) and inventory build-up, all of which turned out fairly stronger than our readings based on preliminary indicators.Two observations stand out. First, demand composition is not particularly healthy. Government is still playing too much of a role in driving growth, private investment remains unusually weak for this stage of the recovery, and net foreign demand is turning rapidly negative. Second, given a rougher environment overall in recent months, and some risks on the horizon, it wouldn’t surprise us to see renewed weakness in growth in the final quarter of the year. More analysis and pictures to follow shortly, in the form of a Market Brief.
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