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Economists trim Q3, Q4 growth forecasts: Philly Fed survey

[NEW YORK] Economists dialed back their forecasts for US economic growth in the third and fourth quarter, but bumped up their growth forecast for the first quarter of 2016, according to the Philadelphia Federal Reserve's quarterly survey released on Friday.

They made similar downward adjustments on their outlook on domestic hiring, while they stuck to their view on inflation, which they said would remain tame in the foreseeable future.

Economists see the economy growing at 2.7 per cent and 2.8 per cent in the current quarter and fourth quarter, respectively. This compared with median forecasts of 3.1 per cent and 2.9 per cent in the previous survey in May.

For the first three months of 2016, they projected US gross domestic product will increase by 2.8 per cent, higher than the 2.4 per cent rise in the previous survey.

On annual basis, the 42 forecasters in the latest Philadelphia Fed survey pared their GDP forecast for 2015 to 2.3 per cent from 2.4 per cent in the prior survey. They kept to their median outlook for 2016 at 2.8 per cent.

As with their GDP outlook, the analysts revised down their view on jobs growth in the second half of 2015.

They saw US employers adding 222,600 workers a month in the third quarter, down from 223,300 in the prior survey. They projected a monthly pace of 220,400 jobs gain in the final quarter of 2015, slower than the 223,000 pace in the survey in May.

They upgraded their forecast on hiring in the first quarter of 2016 to 185,100 a month from a prior estimate of 177,000 a month.

The ongoing payrolls gains led forecasters to trim their view on the unemployment rate in 2015 to 5.3 per cent, down from 5.4 per cent in the May survey.

Forecasters saw very modest rise in inflation in the coming quarters. They forecast the consumer price index rising 0.8 per cent in 2015, up slightly from the 0.7 per cent increase in the May survey.

The core rate on personal consumption expenditure, the Federal Reserve's preferred inflation gauge, was expected to rise by 1.5 per cent in 2015, up from 1.4 per cent in prior survey.

The forecasters expected the core PCE rising to 1.8 per cent in 2016 and 1.9 per cent in 2017.