Monthly GDP rose 5.0% in June following a 4.4% increase in May. The back-to-back increases followed back-to-back declines over March and April that lowered GDP a cumulative 15.3%; the increases over May and June reversed about one-half of that decline. About two-thirds of the June increase was accounted for by personal consumption expenditures. Other important contributors included nonfarm inventory investment, net exports, and the portion of monthly GDP not covered by the monthly source data. The level of GDP in June was 20.4% above the second-quarter average at an annual rate; i.e., zero growth of monthly GDP in each month of the third quarter would imply 20.4% annualized growth of GDP for the third quarter. This is about what we expect (we currently look for 20.1% annualized growth in the third quarter).

IHS Markit's index of Monthly GDP (MGDP) is a monthly indicator of real aggregate output that is conceptually consistent with real Gross Domestic Product (GDP) in the National Income and Product Accounts. The Monthly GDP Index is consistent with the NIPAs for two reasons: first, MGDP is calculated using much of the same underlying monthly source data that is used in the calculation of GDP. Second, the method of aggregation to arrive at MGDP is similar to that for official GDP. Growth of MGDP at the monthly frequency is determined primarily by movements in the underlying monthly source data, and growth of MGDP at the quarterly frequency is nearly identical to growth of real GDP.

Posted 03 August 2020 by Ben Herzon, US Economist, Insights and Analysis, S&P Global Market Intelligence and

Kathleen Navin, Economics Executive Director, US Macroeconomics, S&P Global Market Intelligence