|
 Gross domestic product expanded at a 3.7 percent annual pace instead
of the 2.3 percent rate reported last month, the Commerce Department
said on Thursday in its second GDP estimate.
The GDP report, which was released in the wake of a global stock
market sell-off, should offer assurance to both investors and
cautious Fed officials that the United States was in good shape to
weather the growing strains in the world economy.
Concerns over slowing economic growth in China sent global equity
markets into a tailspin last week, raising doubts that the U.S.
central bank would raise its short-term interest rate next month.
On Wednesday, New York Fed President William Dudley said that
prospects of a September lift-off in the central bank's key lending
rate "seems less compelling to me than it was a few weeks ago."
The upward revisions to second-quarter growth also reflected the
accumulation of $121.1 billion worth of inventories, up from the
previous estimate of $110.0 billion. That meant inventories
contributed 0.22 percentage point to GDP instead of subtracting 0.08
percentage point as reported last month.
While the huge inventory build will likely weigh on growth in the
third quarter, the blow could be softened by rebounding business
investment on capital goods.
Economists polled by Reuters had expected that second-quarter GDP
growth would be revised to a 3.2 percent rate. Underscoring the
economy's solid fundamentals, a measure of private domestic demand,
which excludes trade, inventories and government expenditures,
increased at a 3.3 percent rate, instead of the previously reported
2.5 percent pace.
Consumer spending, which accounts for more than two-thirds of U.S.
economic activity, grew at a 3.1 percent rate, rather than the 2.9
percent pace reported last month. Consumer spending got off a to
brisk start in the third quarter, with retail sales rising solidly
in July.
A strong labor market, cheaper gasoline and relatively higher house
prices, which are boosting household wealth, are helping to support
consumer spending.
[to top of second column] |
Investment in nonresidential structures was revised to show it
rising at a 3.1 percent rate, reflecting stronger spending on
commercial and healthcare construction. It was previously reported
to have contracted at a 1.6 percent pace.
Spending on residential construction was raised to a 7.8 percent
pace from a 6.6 percent rate. Business spending on equipment was not
as weak as initially thought.
The energy sector continued to weigh on growth as it struggles with
the lingering effects of deep spending cuts by oil-field companies
like Schlumberger and Halliburton <HAL.N> in the aftermath of a more
than 60 percent plunge in crude oil prices since last year.
Spending on mining exploration, wells and shafts plunged at a 68.3
percent rate in the second quarter, the largest decline since the
second quarter of 1986. This category was previously reported to
have contracted at a 68.2 percent pace.
The trade deficit was smaller than previously reported, adding 0.23
percentage point to GDP growth. The GDP report also showed after-tax
corporate profits rebounded 1.3 percent in the second quarter after
declining 7.9 percent in the first quarter. A strong dollar has
constrained
the profits of multinational corporations.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
