Most accurate U.S. growth forecasters say to brace for stronger data this week
The two forecasting teams that came closest to predicting the U.S. economy would nearly stall in the first quarter expect other key economic data due this week to be strong.
This gives some support to the view — which some say is more hope than a forecast — that a snap-back is already taking place as the Federal Reserve and most other analysts expect.
UBS and First Trust Advisors both forecast the world’s largest economy grew by a meager 0.5 percent on an annualized basis during the first three months of the year.
All but a handful of the other 99 economists polled by Reuters over the past week expected growth of 1 percent or more, instead of the meager 0.1 percent reported.
FT Advisors has even revised up forecasts for Thursday’s ISM purchasing managers’ index for manufacturing and Friday’s non-farm payrolls releases. The Reuters consensus is for the ISM index to rise to 54.3 from 53.7, and for 210,000 new jobs in April after a gain of 192,000 in March.
FT Advisors, which has had a good track record for accuracy on non-farm payrolls since the start of the year, is now forecasting 54.9 for ISM and 225,000 on NFP. UBS is a bit higher on ISM, going for 55.0, and a bit softer on payrolls at 180,000.
That suggests that the numbers later this week might come in closer to consensus.
Robert Stein, deputy chief economist at FT Advisors, told Reuters:
We do not think that the first quarter report is indicative of a truly slowing economy. We think this is a one-off weather-related report.What we like to focus on in order to look at the trend is consumer spending, business investment and home building. And despite very bad weather for the U.S. … that portion of GDP combined grew at a 1.9 percent annual rate and that’s well within the normal range over the past five years.We expect payroll growth to be about 225,000 in April. In addition to that, given this morning’s very strong number for the Chicago PMI, we think the ISM manufacturing survey will come in around 54.9 which is firmly above the consensus expectation right now.The risk is definitely to the upside for both numbers based on today’s data.
We don’t expect the Fed to forego tapering, even with a weak GDP print. Weakness will be blamed on the weather, and indeed most late-March/early-April figures have suggested some reacceleration.– with reporting and analysis by Ishaan Gera