U.S. Economic Growth Exceeds Estimates On Strength In Exports

(RTTNews) - U.S. economic growth in the second quarter far exceeded the previous estimate, according to a report released by the Department of Commerce on Thursday, with the better than expected growth primarily due to an upward revision to exports.

The report showed that gross domestic product increased at an annual rate of 3.3 percent in the second quarter compared to the advance estimate of 1.9 percent growth. Economists had been expecting GDP growth for the quarter to be revised up to 2.7 percent.

A notable upward revision to the pace of export growth contributed to the faster than expected GDP growth, with the report showing that exports increased by 13.2 percent in the second quarter compared to the previous estimate of 9.2 percent growth.

The Commerce Department said that the upward revision to GDP growth also reflected an upward revision to private inventory investment and a downward revision to imports.

With the upward revision, second quarter GDP growth far outpaced the 0.9 percent growth that was seen in the first quarter as well as the 0.2 percent contraction in the fourth quarter.

The acceleration in the pace of GDP growth compared to the first quarter reflected a larger decrease in imports, an acceleration in exports and consumer spending, a smaller decrease in residential fixed investment, and an upturn in government spending.

At the same time, the Commerce Department noted that the acceleration was partly offset by a larger decrease in inventory investment.

The report showed that consumer spending, which accounts for about two-thirds of economic activity, increased by 1.7 percent in the second quarter, which represents an upward revision from the advance estimate of 1.5 percent growth.

While the report showed a continued decrease in consumer spending on durable goods, a notable increase in spending on non-durable goods contributed to the acceleration in the pace of growth.

The increase in the pace of spending growth may also reflect the impact of the tax rebates that were sent out as part of the government’s economic stimulus plan.

Additionally, the Commerce Department said that its closely watched reading on consumer prices, excluding food and energy prices, rose 2.1 percent in the second quarter, unchanged from the previous estimate. Prices rose by 2.3 percent in the first quarter.

In other economic news, the Labor Department released its report on initial jobless claims in the week ended August 23rd on Thursday, showing that jobless claims fell in line with economist estimates compared to an upwardly revised reading for the previous week.

The report showed that jobless claims fell to 425,000 from the previous week’s revised figure of 435,000. Economists had expected jobless claims to fall to 425,000 from the 432,000 originally reported for the previous week.

With the decrease, jobless claims pulled back further off the six-year high that was set in the week ended August 2nd.

The Labor Department also said that the less volatile four-week moving average fell to 440,250 from the previous week’s revised average of 446,250.

At the same time, the report showed that continuing claims in the week ended August 16th rose to 3.423 million from the preceding week’s revised level of 3.359 million.

The Labor Department is scheduled to release its report on the national employment situation in the month of August next Friday.

Economists currently expect the report to show a decrease of about 70,000 jobs in August following a decrease of 51,000 jobs in July. The unemployment rate is expected remain unchanged at 5.7 percent.

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Posted in Categories: Economy, Forex, Releases, USA.