US sharply upgrades growth to 1.4pc
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.