US Q2 growth estimate raised to 4.6%

//US Q2 growth estimate raised to 4.6%

US Q2 growth estimate raised to 4.6%

The US economy grew at its fastest pace in two and a half years in the second quarter of 2014 and activity was broad-based, in a bullish signal for the rest of the year. 

The Commerce Department today raised its estimate of gross domestic product to show the economy expanded at a 4.6% annual rate. 

The best performance since the fourth quarter of 2011 reflected a faster pace of business spending and sturdier export growth than previously estimated. The stronger growth profile provides a firmer base for the third quarter. 

So far, economic data such as manufacturing, trade and housing suggest that much of the second-quarter momentum spilled over into the third quarter. 

Growth estimates for the July-September quarter range as high as a 3.6% pace. 

US GDP was previously estimated to have advanced at a 4.2% rate in the second quarter and the revision was in line with Wall Street’s expectations.

The US economy had contracted at a 2.1% pace in the first quarter. There were upward revisions to all categories, with the exception of consumer spending, where stronger healthcare outlays were offset by weaknesses in recreation and durable goods spending.

Growth in consumer spending, which accounts for more than two-thirds of US economic activity, was unrevised at a 2.5% rate. Business spending on equipment was raised to an 11.2% pace from a 10.7% rate.

Businesses also invested more in non-residential structures, such as gas drilling, as well as in research and development. Domestic demand increased at a brisk 3.4% rate, instead of the previously reported 3.1% pace.

The fastest pace of growth since the second quarter of 2010 suggested the US economic recovery was more durable after growth slumped in the first quarter because of an unusually cold winter. 

The strong pace of domestic demand growth helps to explain the robust job gains during the quarter, as well as the sharp decline in the unemployment rate. 

The robust labour market performance during the quarter was also supported by a surge in gross domestic income, which measures the income side of the economy. GDI surged at a 5.2% rate, revised up from the previously reported 4.7% pace. 

US businesses accumulated $ 84.8 billion worth of inventory in the second quarter, slightly more than the previously reported $ 83.9 billion. That saw restocking contributing 1.42 percentage points to GDP growth rather than 1.39 percentage points. 

And there is little sign of an inventory overhang, a positive signal for third-quarter GDP growth.

Though trade was a drag for a second consecutive quarter, export growth was raised to an 11.1% pace, the fastest since the fourth quarter of 2010, from a 10.1% rate. Housing market-related spending was revised up as was government spending. 

Corporate profits rebounded a bit more strongly than previously reported from a decline in the first quarter that had been spurred by the expiration of a depreciation bonus.

RTÉ News – Business Headlines

By | 2014-09-27T22:28:57+00:00 September 27th, 2014|Business|0 Comments