The US economy grew by 1.2% in the second quarter, weaker than expected, according to an advance estimate.
Economists had forecast an improvement in growth from the first quarter to an annualized pace of 2.5%, according to Bloomberg.
The big drag on growth was weak business spending, and its impact was worse than recorded in the first quarter. The decline in company inventories shaved off 1.2 percentage points from Q2 GDP.
Private fixed investment fell at a 3.2% pace, the steepest drop in seven years, Bloomberg noted. Also, nonresidential fixed investment — on factories, machinery, and the like — fell for a third straight quarter, by 2.3%.
Meanwhile, consumer spending was strong. Personal consumption in the second quarter jumped to 4.2% from 1.5%, showing that spending remained an important driver of economic growth.
The Commerce Department published its annual revisions spanning Q1 2013 through Q1 2016. First-quarter growth was revised even lower to 0.8% from 1.1%. The department’s updated data for the first quarter, which often reflects major changes compared to the advance estimate, showed that housing construction and exports were weaker than first reported.