Economists raise third-quarter US growth forecasts — Philly Fed survey

New York: Economists raised their forecasts for US economic growth in the third quarter but trimmed their estimates for the balance of 2014, though the outlook for both job growth and lower unemployment was strengthened.

Analysts see the economy growing at an annual rate of 3.0 per cent in the current quarter, up from a previous estimate of 2.9 per cent, according to the Philadelphia Federal Reserve’s quarterly survey of 43 forecasters, released on Friday.

Fourth-quarter growth was forecast at 3.1 per cent, down from a previous estimate of 3.2 per cent, and first-quarter 2015 growth was estimated at 3.1 per cent, unchanged from an earlier estimate of 3.1 per cent.

Meanwhile, they see the economy growing at a rate of 2.1 per cent for all of 2014, down from the previous estimate of 2.4 per cent in the previous survey in May.

Growth in 2015 is expected to come in at 3.1 per cent, unchanged from the 3.1 per cent estimate in the May survey.

The pace of hiring was expected to accelerate in the current quarter compared with previous expectations, with an average rate of monthly nonfarm job growth seen around 228,600 versus a previous forecast of 204,700. That is expected to dip in the fourth quarter, averaging 211,200, although that is up from a prior forecast of 197,900.

Unemployment rate

Hiring should average 204,800 a month for all of 2014, compared with the prior full-year forecast of 196,500.

The jobless rate was expected to be 6.1 per cent at the end of the current quarter and 6.0 per cent by the end of the fourth quarter.

The most recent official unemployment rate released by the government showed the jobless rate in July stood at 6.2 per cent, up a tenth of a point from June’s reading, which was the lowest since September 2008.

Inflation was expected to remain muted, with year-on-year core consumer price inflation, which strips out food and energy costs, averaging 2.1 per cent in the third quarter, compared with a previous estimates of 1.8 per cent. Fourth-quarter core CPI was seen at 2.1 per cent versus a previous forecast of 1.9 per cent.

Looking at the inflation measure most closely tracked by the US Federal Reserve, the core personal consumption expenditures, or PCE, index, forecasters also see muted price pressures. The third-quarter rate was seen at 1.8 per cent, up from 1.7 per cent in the May survey.