US economic activity for the second quarter is on track to accelerate, according to several estimates. The official GDP report for Q2 is due in late July, which means that there’s still a fair amount of uncertainty about the outlook for the final set of numbers for the current quarter. For the moment, however, most estimates continue to project a solid rebound following a sluggish 1.2% increase in Q1.
The Atlanta Fed’s GDPNow model is one of the stronger estimates at the moment, anticipating real seasonally adjusted annualized growth of 3.4% in Q2. By contrast, the 1.4% projection via IHS Markit’s US Composite PMI represents one of the softer forecasts, based on the methodology outlined here.
A survey of economists published on Monday by the National Association for Business Economists sees a strong pickup in growth for Q2. “The weakness in the first quarter is expected to be temporary, with real gross domestic product growth projected to bounce back to an annualized rate of 3.1% in the second quarter of 2017, and to about a 2.5% pace in the second half of the year,” says NABE President Stuart Mackintosh.
Survey data for the services sector also paints an upbeat profile for Q2, based on yesterday’s release of the ISM Non-Manufacturing Index for May. The index dipped to 56.9 last month, down from 57.5 in April, but the latest reading still reflects solid growth in services, the main driver of US economic activity and employment.
“Although the non-manufacturing sector’s growth rate dipped in May, the sector continues to reflect strength, buoyed by the strong rate of growth in the Employment Index,” says Anthony Nieves, chair of ISM. “The majority of respondents’ comments continue to indicate optimism about business conditions and the overall economy.”