Jobs fears persist despite better than expected US?economic growth

GROWTH in the US was higher than previously thought, it was announced yesterday.

GDP growth was revised to 2.5 per cent for the three months to September, up from two per cent, said the US Federal Reserve (Fed).

The rise was beyond the expectations of economists, who had predicted a slightly smaller rise.

The Fed revealed that less drag from net trade, and greater consumption were largely responsible for the boost in the figures.

Growth in consumption was revised up from 2.6 per cent to 2.8 per cent.

In a sign of US consumers becoming more confident in their finances, the rise in consumption was the highest since the first quarter of 2006, according to Paul Dales, US Economist for Capital Economics. The figure “suggests that household spending may be starting to gain some traction,” he said.

However, the news came as US housing data for October showed a slight decline. Home sales fell 2.2 per cent on the previous month, worse than economists’ predictions.

The US economy is still facing an uphill struggle, according to Dales. In spite of improved GDP figures, the economy is “not growing fast enough to reduce significantly the unemployment rate or to prevent a slide into deflation,” he said.

Although unlike the UK and other European countries, the US is not exposed to the crisis in Ireland. “US exports to Ireland are worth less than 0.1 per cent of US GDP,” he added.