American economy stumbles

THE strong dollar and heavy snow meant the US economy had a dismal start to the year.

Its GDP shrank 0.7pc at an annual rate in the first quarter instead of the 0.2pc growth it estimated last month. Cautious shoppers, a reduction in productivity at ports in the country due to labour disputes, exports falling more than expected and a slowdown in energy exploration in the nation all added to the weaker economic picture.

But some economists warned against reading too much into the slump in output and argued the GDP figure was held back by temporary factors. Chris Williamson, chief economist at Markit, said: ‘Survey evidence is already pointing to a second-quarter pick-up.’

Despite the seemingly weak picture there are many bright spots, with unemployment falling steadily and predictions it will reduce from 5.4pc to about 5pc by the end of the year. ÷ US Treasury Secretary Jack Lew yesterday warned that Greece and its creditors need to agree as quickly as possible on a broad deal to solve the country’s debt crisis and prevent Greece falling out of the eurozone by ‘accident’. OFFICIAL figures have shown Britain’s economic recovery did slow at the start of this year despite expectations that growth data would be revised upwards.

The Office for National Statistics said GDP rose by 0.3pc in the first three months of 2015, the worst performance since the end of 2012.

The services sector, which accounts for more than 75pc of UK output, grew by only 0.4pc in the first quarter, its worst performance since the end of 2012. Overseas trade was also to blame as the deficit widened from £9.6bn at the end of 2014 to £13.2bn in the first quarter.