The U.S. economy is likely growing at a 1.9% annualized rate in the third quarter, based on the latest economic data, the Atlanta Federal Reserve’s GDPNow forecast model showed onWednesday.

This was a tad faster than the 1.9% pace estimated by the Atlanta Fed’s GDP program on Friday.

The economy grew at a 2.0% rate in the April-June quarter, down from the first quarter’s brisk 3.1% pace.

"After yesterday's industrial production release from the Federal Reserve Board of Governors, and this morning's new residential construction report from the U.S. Census Bureau, increases in the nowcasts of third-quarter real consumer spending growth and third-quarter real private fixed investment growth were slightly offset by a decrease in the nowcast of third-quarter real net exports," the Atlanta Fed said.

The next GDPNow update is Friday, September 27. 

Meanwhile, U.S. homebuilding surged to more than a 12-year high in August as both single- and multi-family housing construction increased, suggesting that lower mortgage rates were finally providing a boost to the struggling housing market.

Housing starts jumped 12.3% to a seasonally adjusted annual rate of 1.364 million units last month, the highest level since June 2007, the Commerce Department said on Wednesday.

Data for July was revised to show homebuilding falling to a pace of 1.215 million units, instead of decreasing at a rate of 1.191 million units as previously reported.

Economists polled by Reuters had forecast housing starts would advance to a pace of 1.250 million units in August. Building permits increased 7.7% to a rate of 1.419 million units in August, the highest level since May 2007.

Housing starts rose 6.6% on a year-on-year basis in August.

The housing market, the most sensitive sector to interest rates, had until now shown few signs of benefiting from the Federal Reserve's monetary policy easing, which has pushed down mortgage rates from last year's multi-year highs.

Elsewhere on Tuesday, U.S. manufacturing output increased more than expected in August, boosted by a surge in machinery and primary metals production, but the outlook for factories remains weak against the backdrop of trade tensions and slowing global economies.

The fairly upbeat report from the Federal Reserve on Tuesday came as officials from the U.S. central bank were due to gather for a two-day policy meeting. Fears that the year-long trade war between the United States and China could derail the longest economic expansion in history are expected to compel the Fed to cut interest rates again on Wednesday.

The economy is in its 11th year of expansion. The Fed lowered borrowing costs in July for the first time since 2008.

Manufacturing production rose 0.5% last month after an unrevised 0.4% drop in July, the Fed said. Economists polled by Reuters had forecast manufacturing output rising 0.2% in August.

Production at factories fell 0.4% in August on a year-on-year basis. Manufacturing, which accounts for about 11% of the U.S. economy, is being hobbled by the U.S.-China trade dispute. The trade war has eroded business confidence, leading to a slump in the sector, which ironically the Trump administration has sought to protect against what it has called unfair foreign competition.

While the so-called hard data showed a rebound in manufacturing output last month, the trend is likely to remain soft, with sentiment surveys still downbeat. A survey early this month showed a measure of national manufacturing activity contracted in August for the first time since August 2016.

Another survey from the New York Fed on Monday showed a measure of business activity in New York state slipped in September. Manufacturers in New York state were also less upbeat about business conditions over the next six months, with a measure of capital expenditures dropping to a three-year low.

Manufacturing is also weakening as the boost from last year’s $1.5 trillion tax package fades. Cuts in the production of Boeing’s (BA) 737 MAX aircraft, which was grounded indefinitely in March following two deadly crashes, are also adding to manufacturing’s malaise.

The weakness in manufacturing mirrors a slowing domestic economy.