The US economy grew at a 2.3 per cent annualised rate in the second quarter, according to the Bureau of Economic Analysis’s second estimate of GDP growth.
A previously reported contraction of 0.2 per cent in gross domestic product, the value of all goods and services produced, was wiped out and replaced with a 0.6 per cent advance. An upward revision suggests that a strike at west coast ports and the harsh winter weather had a smaller impact on growth than previously thought.
The fall in unemployment has contributed to the improvement in consumer confidence. Consumer spending, which accounts for more than two-thirds of economic output, rose at a 2.9 per cent annualised rate, a significant acceleration from the first quarter, which saw a 1.8 per cent advance.
The saving rate dropped to 4.8 per cent from 5.2 per cent in the first three months of 2015. The fall suggests that American households have started to spend part of the windfall they received from lower oil prices.
Given the improvement in the labour market, consumer spending is likely to sustain growth in the second half of the year.
Business spending remained weak. Non-residential fixed investment, excluding housing, fell 0.6 per cent, compared with growth of 1.6 per cent in the previous quarter. The second-quarter reading was the worst since 2012.
The dollar index, which measures the greenback against the weighted basket of currencies, rose 0.5 per cent to 97.50 on Thursday, just 3 per cent short of a 12-year high it reached in March this year. A strong dollar has raised the prices of US-made goods overseas, while making foreign products cheaper for American consumers. Real exports of goods and services rose 5.3 per cent in the three months through June, outpacing a 3.5 per cent rate in imports growth.
Changes in private inventories subtracted only 0.08 percentage point from the change in real gross domestic product, after adding 0.87 percentage point to the first-quarter change.
Real final sales of gross domestic product, a measure that excludes changes in business inventories, increased 2.4 per cent, compared with a 0.2 per cent decline in the first three months of 2015.
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