Bounce-back in US economy accelerates with 4pc growth
Gains in consumer spending and business investment helped the US economy rebound faster than forecast in the second quarter of this year, following a slump in the prior three months that was smaller than previously estimated.
Gross domestic product rose at a 4pc annualised rate, the most since the third quarter of 2013, after shrinking 2.1pc from January to the end of March, Commerce Department figures showed. The median forecast of 80 economists surveyed by Bloomberg called for a 3pc increase. Consumer spending, the biggest part of the economy, rose 2.5pc, reflecting the biggest gain in purchases of durable goods such as cars in almost five years.
Manufacturers project sales will keep improving in the second half of 2014 thanks to increasing employment. The pick- up in growth, as the expansion enters its sixth year, is among reasons Federal Reserve officials meeting today may continue to pare monthly asset purchases while keeping interest rates low.
"The economy is looking pretty darned good," said Stuart Hoffman, chief economist at PNC Financial Services, after he accurately forecast the 4pc gain in GDP. "The momentum for the second half is solid. The labour market is driving this growth, which means companies are looking for workers. The big picture looks a lot brighter and is probably more accurate than first-quarter GDP suggested," he said.