Second quarter US GDP growth revised down

Ben Southwood
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US GROWTH estimates for the second quarter were slashed yesterday while durable goods sales slumped, but American unemployment continued on its steady downward trend.

Real GDP increased at an annualised rate of 1.3 per cent in the second quarter, the Bureau of Economic’s third estimate revealed, lowering its second estimate by 0.4 percentage points.

On the quarter, the US economy expanded by just 0.3 per cent in the three months to June.

The revision was due to a $5.3bn fall in farm inventories, after their $1bn dip in the first quarter, due to the worst drought for decades, as well as weaker consumer and business spending than previously estimated.

Adding to this less optimistic picture was the 13.2 per cent collapse in new durable goods orders in August, according to Commerce Department data, the biggest fall since the height of the recession in January 2009.

However analysts said this data was extremely volatile due to commercial aircraft component sales. “Don’t panic,” said Paul Ashworth, top US economist at Capital Economics, “Commercial aircraft orders fell by a stunning 101.8 per cent month on month.” Excluding transport from the data, new orders were down just 1.6 per cent, a small reversal of the 3.3 per cent July increase.

The labour market was a lone source of good news. The headline seasonally adjusted measure of new unemployment benefit claims declined 26,000, dropping from 385,000 to 359,000 last week. And total claims also declined, although the data is for a week earlier. Seasonally-adjusted insured unemployment declined 4,000 into the week ending 15 September, while the underlying figure dived 94,416.