Wednesday, 31 July 2013

US Economy Grew 1.7% In Second Quarter

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2:21pm UK, Wednesday 31 July 2013 US dollars US economic growth accelerated in the April-June quarter

The US economy grew at an annualised rate of 1.7% in the second quarter of the year - a better performance than most economists had predicted.

The Commerce Department said growth improved from a sluggish 1.1% rate in the January-March quarter, which was revised from an initial 1.8% rate.

Consumers increased their spending more slowly in the second quarter and a surge in imports reduced growth by the most in three years.

But the federal government cut spending only 1.5%, while state and local governments increased spending for the first time in a year.

Economists are hopeful that growth could improve to around 2.5% in the third and fourth quarters - boosted by jobs growth.

A closely-watched private survey released on Wednesday suggested that firms created 200,000 net new jobs in July.

Payroll company said that firms hired at the fastest pace since December.

The government also released comprehensive revisions that updated the nation's gross domestic product, or GDP, over the last several decades.

Those figures showed that the economy grew at a stronger 2.8% in 2012, up from an earlier estimate of 2.2%. Last year's first quarter was revised much higher, while the economy barely expanded in the fourth quarter.

Other recent data - for example on home construction, sales and prices - have suggested that growth will continue to improve.

Americans purchased newly built homes in June at the fastest pace in five years. That has raised builder confidence to a seven-year high, which in turn should lead to increases in construction and more jobs.

Overall hiring has accelerated this year, but unemployment remains high at 7.6%, limiting consumer spending.

Federal Reserve officials have forecast better growth in the second half of the year.

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