US GDP expanded faster than initially believed due to smaller decline in inventories
The US economy grew at faster rate than expected in the three months to September, according to new official figures published today.
The US commerce department said the economy grew at an annualised rate – the rate the economy would grow if the pace were maintained for a year – of 2.1 per cent rather than an initially-reported 1.5 per cent.
The upward revision was due to a smaller decline in inventories – the difference between goods sold and goods produced. Inventory accumulation only knocked 0.6 percentage points off growth in the second estimate rather the 1.4 percentage points in the first.
Despite the upward revision, it marks a slowdown on the three months to June when the economy grew at an annualised rate of 3.9 per cent.
“The upward revision to the US third-quarter GDP growth number, from 1.5 per cent to 2.1 per cent, looks to give further ammunition to hawks on the Federal Open Markets Committee and supports their case for a first interest rate rise in America since 2006,” said Russ Mould, investment director at AJ Bell.
“Even so, it is not an open-and-shut case. Lagging indicators – GDP and employment – are strong, while concurrent indicators such as industrial production and retail sales are mixed and leading ones such as sentiment surveys and PMI reports look soft on forward-looking signals like orders and pricing.”