FILE PHOTO – Robotic arms spot welds on the chassis of a Ford Transit Van under assembly at the Ford Claycomo Assembly Plant in Claycomo, Missouri April 30, 2014. REUTERS/Dave Kaup


The U.S. economy is forecast to expand at a 4.1 percent annualized pace in the second quarter following the release of April figures on housing starts and industrial output, the Atlanta Federal Reserve’s GDP Now forecast model showed on Tuesday.

Domestic factory production increased 1.0 percent last month for its biggest monthly gain in over three years, but housing starts unexpectedly fell 2.6 percent, government data showed on Tuesday.

The latest second-quarter gross domestic product estimate was faster than the 3.6 percent reading calculated on May 12, the Atlanta Fed said on its website.

The latest estimate was still below the initial figure of 4.3 percent calculated by the Atlanta Fed model on May 1.

The forecast of second-quarter residential investment growth climbed to 8.3 percent from 6.0 percent following the latest housing starts data, the regional Fed said.

Its view on final sales to private purchasers growth in the second quarter increased to 3.6 percent from 3.3 percent following the April industrial output report.

Atlanta Fed’s estimate on the contribution of inventory investment to second-quarter GDP grew to 1.20 percentage points from 1.00 with motor vehicle and parts dealer inventories accounting for the bulk of the increase.

(Reporting by Richard Leong)