Q2 US GDP GROWTH MISSES EXPECTATIONS

LATEST:The third and final reading of second-quarter GDP growth from the U.S. Bureau of Economic Analysis is out.

The economy grew at a 2.5% annualized pace in the second quarter, in line with the BEA’s previous Q2 GDP estimate.

However, economists were expecting a tick up to 2.6% in the final reading. In Q1, the economy expanded only 1.1% annualized.

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Personal consumption growth was also unchanged from the BEA’s previous reading at 1.8%, and was also expected to tick up to 1.9% in the final reading. The number marks a slowdown from Q1’s 2.3% pace of growth.

Core PCE fell to 0.6% from the BEA’s previous reading of 0.8%. Economists were expecting core PCE to remain unchanged from the last reading 0.8%. In Q1, core PCE was 1.4%.

Below is a summary of the data from the release:

Real personal consumption expenditures increased 1.8 per cent in the second quarter, compared with an increase of 2.3 per cent in the first. Durable goods increased 6.2 per cent, compared with an increase of 5.8 per cent. Nondurable goods increased 1.6 per cent, compared with an increase of 2.7 per cent. Services increased 1.2 per cent, compared with an increase of 1.5 per cent.

Real nonresidential fixed investment increased 4.7 per cent in the second quarter, in contrast to a decrease of 4.6 per cent in the first. Nonresidential structures increased 17.6 per cent, in contrast to a decrease of 25.7 per cent. Equipment increased 3.3 per cent, compared with an increase of 1.6 per cent. Intellectual property products decreased 1.5 per cent, in contrast to an increase of 3.7 per cent. Real residential fixed investment increased 14.2 per cent, compared with an increase of 12.5 per cent.

Real exports of goods and services increased 8.0 per cent in the second quarter, in contrast to a decrease of 1.3 per cent in the first. Real imports of goods and services increased 6.9 per cent, compared with an increase of 0.6 per cent.

Real federal government consumption expenditures and gross investment decreased 1.6 per cent in the second quarter, compared with a decrease of 8.4 per cent in the first. National defence decreased 0.6 per cent, compared with a decrease of 11.2 per cent. Nondefense decreased 3.1 per cent, compared with a decrease of 3.6 per cent. Real state and local government consumption expenditures and gross investment increased 0.4 per cent, in contrast to a decrease of 1.3 per cent.

The change in real private inventories added 0.41 percentage point to the second-quarter change in real GDP, after adding 0.93 percentage point to the first-quarter change. Private businesses increased inventories $US56.6 billion in the second quarter, following increases of $US42.2 billion in the first quarter and $US7.3 billion in the fourth.

Real final sales of domestic product — GDP less change in private inventories — increased 2.1 per cent in the second quarter, compared with an increase of 0.2 per cent in the first.

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ORIGINAL: Heads up! We are minutes away from the third and final reading of second-quarter GDP growth from the U.S. Bureau of Economic Analysis, due out at 8:30 AM ET.

Economists predict GDP grew at a 2.6% annualized pace in the second quarter, which is higher than the BEA’s second reading put out a month ago of 2.5%.

Q2 personal consumption growth is expected to clock in at 1.9%, slightly higher than last month’s BEA estimate of 1.8%. Either of those numbers would mark a slowdown from Q1’s 2.3% pace of growth.

Core personal consumption expenditure, one of the FOMC’s favourite measures of inflation, is expected to remain unchanged from last month’s estimate at 0.8% in Q2.

We will have the full release LIVE at 8 AM ET. Click here to refresh for the latest »

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