US sharply up­grades growth to 1.4pc

The Myanmar Times - - Business | International -

THE US econ­omy grew faster than orig­i­nally thought in the sec­ond quar­ter of this year, with Com­merce Depart­ment fig­ures show­ing a 1.4 per­cent an­nual rate.

The Com­merce Depart­ment’s pre­vi­ous sec­ond-quar­ter GDP es­ti­mate had been a gloomier 1.1pc. The fig­ures ,how­ever, sur­passed an an­a­lyst con­sen­sus, which had called for a re­vi­sion to 1.3pc.

Job mar­kets also showed signs of con­tin­ued strength as the US Labour Depart­ment re­ported that un­em­ploy­ment claims re­mained low in the week end­ing Septem­ber 24, com­ing in at 254,000.

In re­leas­ing the new num­bers, which are de­rived from a fuller set of data than that used in prior es­ti­mates, the Com­merce Depart­ment said the gen­eral pic­ture of US growth in the quar­ter re­mained the same.

The most no­table change be­tween the sec­ond and third es­ti­mates was that busi­nesses’ fixed in­vest­ments in­creased in­stead of de­creas­ing, as they had in July’s es­ti­mate, the depart­ment said in a state­ment.

Per­sonal con­sump­tion and ex­ports also helped drive the re­sults in the sec­ond quar­ter, it said. Th­ese gains were partly off­set by drops in state and lo­cal gov­ern­ment spend­ing as well as spend­ing on homes.

Along with the health of labour mar­kets this year, the pace of eco­nomic growth has been a key fac­tor in mone­tary pol­i­cy­mak­ers’ de­lib­er­a­tions on set­ting in­ter­est rates, which are at his­tor­i­cally low lev­els af­ter be­ing raised for the first time in a decade in De­cem­ber.

Taken to­gether with an anaemic 1.1pc growth rate in the first quar­ter, ini­tial es­ti­mates for the sec­ond quar­ter had helped paint a down­cast por­trait of the first half of 2016, stok­ing ner­vous­ness about the health of the US econ­omy.

The In­ter­na­tional Mone­tary Fund has said it plans to down­grade its 2016 fore­cast for the US in light of the poor first half.

How­ever, US Fed­eral Re­serve chair Janet Yellen has said most Fed pol­i­cy­mak­ers were con­fi­dent in the econ­omy and agreed that a rate hike would be ap­pro­pri­ate be­fore the end of 2016.

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