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US financial progress within the first half of the 12 months seems on observe to proceed within the third quarter, based mostly on the median estimate through a number of sources which are aggregated by CapitalSpectator.com.
At the moment’s replace signifies that US output for the July-through-September interval is predicted to rise 2.5% for ’s seasonally adjusted annualized change. This median nowcast displays a slight enhance over the two.4% enhance reported by the federal government for Q2.
US Actual GDP Change
The present 2.5% median nowcast for Q3 additionally marks a firmer estimate vs. the earlier 2.0% estimate for Q3 revealed on Aug. 17.
Though the outlook for the present quarter stays encouraging, there are a number of caveats to think about. First, the upbeat nowcast is essentially based mostly on upbeat numbers for July. With lots of the key information factors revealed for final month, there’s a powerful case for deciding that this 12 months’s resilient US economic system prolonged by way of July.
In contrast, the remainder of Q3 – August and September – continues to be largely guesswork, and an early clue through sentiment information recommends warning.
This week’s launch of the PMI Output Index, a GDP proxy, signifies that US progress slowed to a crawl this month.
“A near-stalling of enterprise exercise in August raises doubts over the power of US financial progress within the third quarter,” says Chris Williamson, chief enterprise economist at S&P International Market Intelligence, which publishes the PMI numbers. “The survey reveals that the service sector-led acceleration of progress within the second quarter has light, accompanied by an additional fall in manufacturing facility output.”
US PMI vs GDP
PMI survey information is hardly the final phrase on financial exercise for anybody month, however the newest numbers actually make a case for managing expectations down for a few of the extra strong estimates for Q3 till we see extra onerous information for August.
Notably, the Atlanta Fed’s present nowcast for Q3 is a red-hot 5.9% enhance for GDP, based mostly on the GDPNow mannequin as of Aug. 24. The most recent PMI replace, which is included in CapitalSpectator.com’s median estimate above, actually presents a pointy distinction to the alternative excessive.
As regular, specializing in anybody information level tends to be deceptive, and so our greatest guestimate, as all the time, stays the median nowcast. By that customary, there’s nonetheless a strong case for anticipating that Q3 financial exercise will submit progress according to the earlier quarter.
There are nonetheless two months to go earlier than the US Bureau of Financial Evaluation publishes its preliminary Q3 GDP information on Oct. 26. For the second, the median nowcast means that the current development of average progress continues.
If and when there’s a convincing case for revising that estimate, up or down, we’ll see it in modifications to the median estimate.
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