The US economy grew slower than expected in the third quarter.
The advance estimate of the increase in gross domestic product, the value of all goods and services produced, was 1.5%. Economists had anticipated economic growth of 1.6% in Q3.
Personal consumption grew 3.2%, just below the forecast for 3.3%.
This could all be revised in the next two estimates, due in November and December.
The Department of Commerce said in its release, “The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), state and local government spending, nonresidential fixed investment, exports, and residential fixed investment that were partly offset by negative contributions from private inventory investment.”
Huge cuts in energy-sector investment since the oil crash, and a drag from inventories, contributed to softening economic growth.
“Ex-inventories, this is a solid report,” Pantheon Macroeconomics’ Ian Shepherdson wrote in a client note. “With inventories likely to be a much smaller drag on Q4 growth, the prospect of a 3% headline GDP number is very real.”
The manufacturing sector also cooled after the stronger dollar, weaker global demand, and other factors weighed on production.
In the past few weeks, economists steadily lowered their estimates for growth for the quarter and the full year. They raised estimates on Wednesday, however, after the advance goods trade balance showed that the deficit shrank to $US58.6 billion from $US66.6 billion.
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