GDP Growth Q3 2013- Third Estimate

The first estimate of Q3 GDP growth from the Bureau of Economic Analysis surprised on the upside with a growth of 2.82 percent annualized, the second estimate came in at 3.6 percent and the third at 4.1 percent, well within the range that results in the growth of steel demand. GDP in Q3 2013 was 1.97 percent higher than in Q3 2012. The major reason for the continual upward revision of third quarter data was the contribution of business inventory growth.

Figure 1 shows the SMU graphical analysis of contributors to GDP quarterly since Q1 2007. Compared to Q2 the major change was the contribution of business inventories which amounted to 0.41 percent in Q2 and 1.67 percent in Q3. Inventory contribution has been the most volatile component in the past but has not necessarily resulted in much of a change in total growth when inventories declined. Not surprisingly a strong inventory component in one quarter tends to promote growth in subsequent quarters. Durable goods continued to have a strong performance which supports the monthly Commerce Department data.