US financial development within the first half of the yr seems on monitor to proceed within the third quarter, based mostly on the median estimate through a number of sources which are aggregated by CapitalSpectator.com.
As we speak’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 printed on Aug. 17.
Though the outlook for the present quarter stays encouraging, there are a number of caveats to contemplate. First, the upbeat nowcast is basically based mostly on upbeat numbers for July. With most of the key information factors printed for final month, there’s a robust case for deciding that this yr’s resilient US financial system prolonged by 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 development slowed to a crawl this month.
“A near-stalling of enterprise exercise in August raises doubts over the energy of US financial development within the third quarter,” says Chris Williamson, chief enterprise economist at S&P International Market Intelligence, which publishes the PMI numbers. “The survey exhibits that the service sector-led acceleration of development within the second quarter has light, accompanied by an extra fall in manufacturing facility output.”
US PMI vs GDP
PMI survey information is hardly the final phrase on financial exercise for anyone month, however the newest numbers actually make a case for managing expectations down for among the extra strong estimates for Q3 till we see extra exhausting 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 other excessive.
As standard, specializing in anyone information level tends to be deceptive, and so our greatest guestimate, as at all times, stays the median nowcast. By that commonplace, there’s nonetheless a stable case for anticipating that Q3 financial exercise will put up development 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 latest pattern of reasonable development 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.
