The U.S. economy is growing at a 1.95% annualized pace in the second quarter based on a stronger-than-expected report on domestic manufacturing in March, the New York Federal Reserve's Nowcast model showed on Friday.

This was faster than the 1.62% growth rate calculated by the N.Y. Fed model a week ago.

On Monday, the Institute for Supply Management (ISM) said its index of U.S. manufacturing activity improved to 55.3 in March from 54.2 in February, which had been the lowest reading since November 2016. Economists polled by Reuters had forecast a March figure of 54.5.

"Positive surprises from the ISM manufacturing survey accounted for most of the action," the New York Fed said on its website.

Meanwhile, the N.Y. Fed's forecast program estimated U.S. gross domestic product likely grew at a 1.40% pace in the first quarter, compared with a 1.31% projection the week before

Its latest GDP view for the first quarter is running below other regional central banks' GDP models.

The Atlantic Fed's GDPNow model showed a 2.1% growth rate on April 2, while the St. Louis Fed's Real GDP Nowcast showed a 2.07% pace earlier Friday.