US GDP fell by 0.7 per cent in the first three months of the year, official statistics published today showed – better than the 0.9 per cent drop expected by analysts, but nevertheless a disappointing performance.
The figure is a sharp fall from the 0.2 per cent growth originally estimated for the first quarter, although some analysts have blamed it on the way the US' statistics office seasonally adjusts GDP figures – over the past few years, first quarter growth has tended to be much lower than the following quarters.
However, there are signs the US economy, which in recent years has shown impressive recovery, is beginning to slow. Earlier this month, figures showed disappointingly flat retail sales in April, following a 0.2 per cent decline in March. That was reflected by a disappointing statement from retailer Macy's, which last week forecast lower second quarter profits.
Although economists had expected the US Federal Reserve to become one of the first major central banks to hike rates, there may now be less consensus a rise is imminent.
That said, Janet Yellen, the Fed's chairman, has struck a more positive note in recent weeks, suggesting data is likely to strengthen.
Chris Williamson, chief economist at Markit, said the question was not over whether it will rebound, but by how much.