US monthly GDP falls for a second month in May

S&P Global Market Intelligence’s monthly GDP measure fell in May, marking a second consecutive monthly decline, according to its July 1 release cited in an economic indicators analysis. The decline contrasts with several other measures followed by the National Bureau of Economic Research’s Business Cycle Dating Committee, while S&P Global Market Intelligence and the Atlanta Fed’s GDPNow model were still tracking second-quarter growth at a 1.3% annualized rate.

The monthly GDP series, formerly associated with IHS and Macroeconomic Advisers, is designed to give a timelier reading of output than the official quarterly GDP figures. The analysis presented the indicator in chained 2017 dollars and compared it with a set of coincident economic measures commonly used to judge the business cycle.

Those measures included nonfarm payroll employment from the Bureau of Labor Statistics, civilian employment adjusted with smoothed population controls, Federal Reserve industrial production, real personal income excluding current transfers, and real manufacturing and trade sales. The comparison also included official GDP from the Bureau of Economic Analysis, the Atlanta Fed’s GDPNow estimate as of July 8, and S&P Global Market Intelligence’s monthly GDP series.

Monthly GDP is subject to revision, as are other economic estimates. The analysis noted that the May decline was notable because it was one of the few output measures shown as moving lower that month. The absence of a uniform decline across the broader indicator set suggests the monthly GDP reading should be interpreted alongside other labor, income, production and sales data rather than as a stand-alone recession signal.

Quarterly growth readings remain positive

To assess how the monthly GDP measure fits with other indicators, the analysis compared quarter-on-quarter annualized growth rates. The comparison included S&P Global Market Intelligence’s monthly GDP, the Brave-Butters-Kelley monthly GDP measure, the Philadelphia Fed coincident index, and private nonfarm payrolls from the BLS.

On that basis, the analysis characterized monthly GDP as volatile. It also said the recent monthly readings were not inconsistent with the 1.3% quarter-on-quarter annualized growth rate being tracked for the second quarter by both GDPNow and S&P Global Market Intelligence.

GDPNow is a model-based nowcast maintained by the Federal Reserve Bank of Atlanta and updated as economic data are released. It is separate from the BEA’s official GDP estimates, which are published quarterly and revised as more complete information becomes available.

The latest monthly GDP readings therefore point to softness in a timely output gauge, while the broader set of coincident indicators and second-quarter tracking estimates continue to show modest positive growth rather than a synchronized contraction across the economy.

This story draws on original reporting from Econbrowser.