GDP for third quarter (2013) – first estimate

Bottom line: The headline data look very weak, but the details show a much more mixed picture. This first estimate will probably be revised upward over the next two months. In any event, the weakness should be offset in the fourth quarter, as exports rebound.

• The headline rate of growth – only 2.2% at an annual rate, is the lowest for any quarter since the recessionary year of 2009.
• But the domestic economy performed well, with strong gains in both private and public consumption, as well as in investment.
• The weakness was almost entirely in the external sector, where imports rose and exports fell. But the rise in imports was due to a surge in vehicle imports in July, ahead of  tax increases in August, and these vehicle imports drove (pun intended) the increases in both private consumption and corporate investment. As for exports, the latest trade data show them recovering strongly in September and especially in October.
• It is possible that the extreme seasonality this year, due to all the Jewish holidays falling in September rather than being spread over September and October, as usually happens, meant that the seasonal adjustment applied to the data.
• Furthermore, the second quarter GDP data was upwardly biased by the impact of natural gas production, so that the base level for the third quarter was artificially high.