US: Construction spending and vehicle sales in focus – Nomura

Analysts at Nomura point out that US construction spending in December increased by 0.7% m-o-m following a 0.6% increase in November.

Key Quotes

“Private residential construction spending increased by a solid 0.8% m-o-m in December, up from 0.7% in November. A solid increase in construction outlay in Q4 vmay partly have been boosted by rebuilding effort after the landfall of major hurricanes. However, strong growth near the end of the quarter suggests some of that momentum could continue in Q1.”

“Vehicle sales: We expect vehicle sales to slow to a 17.0mn saar pace in February after coming in at 17.1mn saar in January. The accelerated sales pace near the end of 2017 was likely driven by transitory replacement demand following major storms and unsustainably high incentive spending. In 2018, we expect a gradual moderation from the high sales pace in Q4 2017. Further, rising interest rates will likely dampen consumer demand further and affect potential buyers with lower credit scores the most.”