The U.S. economy is growing at a 4.4 percent annualized rate in the third quarter in the wake of the latest data on payrolls and services activity, the Atlanta Federal Reserve’s GDPNow forecast model showed on Friday.
This was slower than the 5.0 percent pace calculated by the regional Fed’s forecast program on Wednesday, the Atlanta Fed said.
After Friday's data releases, the nowcasts of third-quarter real consumer spending growth and third-quarter real private fixed investment growth declined from 3.4 percent and 5.9 percent, respectively, to 2.9 percent and 4.2 percent, respectively. These declines more than offset an increase in the nowcast of the contribution of inventory investment to third-quarter real GDP growth from 1.80 percentage points to 1.95 percentage points.
The next GDPNow update is Thursday, August 9.
U.S. job growth slowed more than expected in July as employment in the transportation and utilities sectors fell, but a drop in the unemployment rate suggested that the labor market was tightening.
Nonfarm payrolls increased by 157,000 jobs last month, the Labor Department said on Friday. The economy created 59,000 more jobs in May and June than previously reported and needs to generate about 120,000 jobs per month to keep up with growth in the working-age population.
The unemployment rate fell one-tenth of a percentage point to 3.9 percent in July, even as more people entered the labor force in a sign of confidence in their job prospects. The low unemployment rate could allow the Federal Reserve to raise interest rates again in September.
Meanwhile, U.S. services companies grew at a slower pace in July as business activity and new orders slipped.
The Institute for Supply Management said its services index fell to 55.7 last month compared to 59.1 in June. Readings greater than 50 signal an expanding economy.
The services sector, where most Americans are employed, has now grown for 102 straight months, or more than eight years.
The index was pulled down by sharp monthly decreases in business activity and news orders, both of which had been relatively high in June. The employment component of the index improved last month.
The survey that forms the index found that 16 different services sectors reported growth, including mining, accommodation and food services, retail and real estate. Just two sectors reported a decrease: education and professional, scientific and technical services.
Companies in the survey were generally positive about the economy, although several cited risks of the tariffs pushed by the Trump administration on China and the European Union.
(Newsmax wire services contributed to this report).
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