Economic activity in the U.S. increased by less than expected in the second quarter, the Commerce Department revealed in a report on Thursday, although the report also showed a notable upward revision to the data for the first quarter.
The Commerce Department said real gross domestic product increased at an annual rate of 2.3 percent in the second quarter compared to expectations for an increase of about 2.6 percent.
However, the report also said first quarter GDP rose by an upwardly revised 0.6 percent compared to the 0.2 percent contraction previously reported.
The GDP growth in the second quarter partly reflected a notable increase in consumer spending, which climbed by 2.9 percent in the second quarter after rising by 1.8 percent in the first quarter.
The increase in GDP also reflected positive contributions from exports, state and local government spending, and residential fixed investment.
However, the pace of growth was limited by negative contributions from federal government spending, private inventory investment and non-residential fixed investment.
The Commerce Department said the upward revision to first quarter GDP primarily reflected upward revisions to non-residential fixed investment, private inventory investment, residential fixed investment, and federal government spending.
Reflecting revisions to previous data, the report said GDP growth in 2013 was downwardly revised to 1.5 percent from 2.2 percent. The growth rate for 2014 was unchanged at 2.4 percent.
Steve Murphy, U.S. Economist at Capital Economics, said, “Moving forward, we expect GDP growth to average close to 3% annualized in the second half of the year, due to a turnaround in mining and a fading impact from the dollar’s appreciation.”
“This should provide a decent base for economic growth of around 2.8% next year and support the case for higher interest rates sooner rather than later,” he added.
On the inflation front, the Commerce Department said its reading on core consumer prices, which exclude food and energy prices, rose by 1.8 percent in the second quarter following a 1.0 percent increase in the first quarter.
The material has been provided by InstaForex Company – www.instaforex.com