The U.S. economy is expected to grow at a 4.0 percent annualized pace in the second quarter based on the latest data on factory activity, construction and consumer spending released this week, the Atlanta Federal Reserve's GDP Now forecast model showed.

The latest second-quarter gross domestic product estimate was faster than the 3.8 percent clip calculated on Tuesday, the Atlanta Fed said.

Meanwhile, minutes of the Fed's May 2-3 policy meeting, which were published last week, showed that while policymakers agreed they should hold off hiking rates until there was evidence the growth slowdown was transitory, "most participants" believed "it would soon be appropriate" to raise borrowing costs.

The U.S. central bank raised interest rates by 25 basis points in March. Data on consumer spending and manufacturing have offered hope that growth picked up early in the second quarter after gross domestic product increased at a tepid 1.2 percent annualized rate at the start of the year.

Persistently sluggish wage growth could cast a shadow on further monetary policy tightening. Average hourly earnings rose four cents or 0.2 percent in May after a similar gain in April.

That left the year-on-year increase in wages at 2.5 percent.

But with the labor market expected to hit full employment this year, there is optimism that wage growth will accelerate.