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Atlanta Fed Trims 4Q GDP Growth Estimate to 1.1 Percent

Atlanta Fed Trims 4Q GDP Growth Estimate to 1.1 Percent

By    |   Friday, 01 November 2019 02:52 PM

The U.S. economy is likely growing at a 1.1% annualized rate in the fourth quarter, the Atlanta Federal Reserve’s GDPNow forecast model showed Friday.

This was slower than the 1.5% pace estimated by the Atlanta Fed’s GDP program on Thursday.

"After this morning's release of the employment report by the U.S. Bureau of Labor Statistics, the Manufacturing ISM Report On Business from the Institute for Supply Management, and the construction spending report from the U.S. Census Bureau, the nowcasts of fourth-quarter real personal consumption expenditures growth and fourth-quarter real gross private domestic investment growth decreased from 2.3 percent and -0.7 percent, respectively, to 2.2 percent and -2.5 percent, respectively," the Atlanta Fed said.

Earlier this week, the government said gross domestic product increased at a 1.9% annualized rate in the third quarter, also as businesses maintained a steady pace of inventory accumulation, exports rose and the housing market rebounded after contracting for six straight quarters, the government said in its advance estimate of GDP, Reuters said.

The economy grew at a 2.0% pace in the April-June period. Economists polled by Reuters had forecast GDP increasing at a 1.6% rate in the July-September quarter. Third-quarter growth marked a further slowdown from the brisk 3.1% rate notched in the first three months of the year. Still, the economy is expanding at its potential, estimated between 1.7% and 2.0%.

The GDP report showed the overall trend in inflation remaining moderate last quarter.

Earlier Friday, new data from the Institute for Supply Management (ISM) said the manufacturing sector contracted for a third straight month in October, though at a slower pace than the previous month.

The Institute for Supply Management, an association of purchasing managers, said Friday that its manufacturing index blipped up to 48.3 last month from 47.8 in September, the first uptick since March. But anything below 50 signals a contraction and manufacturing has been on a three-month losing streak, the Associated Press explained.

New orders, production and hiring all contracted. But export orders increased in October after a September decline.

Twelve of 18 manufacturing industries contracted in October, led by primary metals, clothing and textile mills.

“Today’s late-morning U.S. reports revealed a small October ISM rise to a still sub-50 reading of 48.3 that would have weighed on the market were it not for this morning’s robust U.S. jobs report that sharply truncated the downside risks for the economy. The pockets of weakness in some sentiment surveys now look more like strike-distortions or outliers,” wrote analysts at Action Economics, according to Reuters.

Meanwhile, U.S. construction spending increased more than expected in September as investment in homebuilding rose its highest level in nine months, Reuters said.

The Commerce Department said on Friday construction spending rebounded 0.5%. Data for August was revised down to show construction outlays falling 0.3% instead of ticking up 0.1% as previously reported.

Economists polled by Reuters had forecast construction spending gaining 0.2% in September. Construction spending dropped 2.0% on a year-on-year basis in September.

Spending on private residential projects increased 0.6% to $511.4 billion, the highest level since December 2018, after advancing 0.8% in August. Investment in residential construction rebounded in the third quarter after contracting for six straight quarters, thanks to declining mortgage rates.

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The U.S. economy is likely growing at a 1.1% annualized rate in the fourth quarter, the Atlanta Federal Reserve’s GDPNow forecast model showed Friday.
atlanta, fed, gdp, growth
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2019-52-01
Friday, 01 November 2019 02:52 PM
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