How did trade data change the growth estimate?

  • The U.S. September trade deficit narrowed by 700 million dollars from the revised August figure, to 105 billion dollars; Goldman Sachs had previously forecast a deficit of 108 billion dollars, while the median forecast was 107.9 billion dollars.
  • Goldman Sachs raised its fourth-quarter GDP tracking estimate, at a quarter-on-quarter annualized rate, by 0.1 percentage points to 1.9%; the prior-quarter tracking estimate remained at 3.5% when rounded.

Why did the deficit narrow, and how does the GDP measure differ?

  • September goods exports increased by 5.1 billion dollars, mainly driven by computers, peripheral equipment, semiconductors, and fuels and lubricants; lower exports of nonferrous metals offset part of the increase.
  • Goods imports increased by 4.4 billion dollars over the same period: imports of computers, peripheral equipment, and semiconductors rose sharply, while a significant decline in nonmonetary gold imports provided an offset. The services trade surplus was unchanged at 30.9 billion dollars.
  • Gold imports and exports are not included in GDP; the recent decline in oil exports mainly reflects a slower pace of releases from the Strategic Petroleum Reserve and was broadly GDP-neutral. Goldman Sachs noted that the trade balance excluding these factors had moved closer to the overall trade balance.

Did the ADP employment data change the nonfarm payroll outlook?

  • October private-sector employment increased by 86 thousand month over month on a seasonally adjusted basis, above Goldman Sachs' forecast of 70 thousand and the median forecast of 67 thousand; the revised September increase was also 86 thousand.
  • The services sector added 82 thousand jobs, including 39 thousand in trade, transportation, and utilities and 28 thousand in education and health services; a decline of 27 thousand in professional and business services offset part of the increase. Goods-producing industries added 4000 jobs.
  • Goldman Sachs kept its forecast for October nonfarm payrolls to increase by 75 thousand, above the market consensus of 65 thousand.

What changed in wage growth?

  • The median year-over-year growth in total annual compensation for employees who stayed in their jobs was 4.4% in October, unchanged from September; growth for job changers was 7.6%, accelerating by 0.2 percentage points from September.
  • ADP's newly released median base-pay measures showed year-over-year growth of 3.0% for employees who stayed in their jobs and 4.8% for job changers, both unchanged from September.