Spring GDP in U.S. better than previously reported

WASHINGTON — The U.S. economy expanded at a slightly faster pace in the spring than previously reported, aided by newfound strength in business construction.

The Commerce Department said Thursday the gross domestic product, the broadest measure of the economy, expanded at an annual pace of 1.4 per cent in the April-June quarter. That is up from a previous estimate of 1.1 per cent growth. Much of the upward revision reflected an increase in spending on structures such as office buildings.

The modest second quarter gain followed weaker readings of 0.8 per cent GDP growth in the first quarter and 0.9 per cent in the final three months of last year. Economists, however, believe the economy has accelerated in the current quarter, helped by strong consumer spending.

Consumer spending, which accounts for 70 per cent of economic activity, grew at a 4.3 per cent rate in the second quarter. That is down slightly from a previous estimate of 4.4 per cent but still the best showing since late 2014.

The economy slowed sharply in the fourth quarter of last year, and GDP growth has averaged just one per cent over the past nine months. Much of that weakness reflected a sharp slowdown in the growth of inventories as businesses with unsold goods cut back on restocking shelves.

But economists believe the inventory correction has run its course. Analysts at Macroeconomic Advisers are forecasting that growth will rebound to 3 per cent in the current July-September quarter. They are forecasting a solid 2.4 per cent increase in GDP for the final three months of this year.