Economic Growth: GDP Not as Weak as First Estimated; Factory Activity Slows
Growth in the U.S. economy during the first quarter didn’t slow as much as first estimated, according to government numbers released Friday, while separate reports showed weaker factory activity but continued high consumer sentiment.
The Commerce Department reported the nation’s gross domestic product (GDP) increased at an annual rate of 1.2% in the first three months up the year, the weakest performance since the first quarter of 2016.
The latest reading is up from a pace of 0.7% that it reported a month earlier. but down from a rate of 2.1% in the final quarter of 2016.
Adding to this slightly better performance was higher growth in consumer spending while inventory investment slowed.
While this updated performance isn’t as good as many were hoping, some analysts believe the Federal Reserve remains on track to push interest rates higher again.
“On balance, data to-date, [the numbers] remains consistent with our expectation that overall GDP growth bounced back to a solid 2.9% rate in the second quarter and, combined with further tightening in labor markets, is consistent with our expectation that the Fed will hike the fed funds target range by another 25 basis points (.25%) in June,” said Nathan Janzen, senior economist at RBC Economic Research.
Durable Goods Orders, Shipments Decline
Meantime, a separate Commerce Department report showed new orders for factory-made goods designed to last at least three years fell for the first time in five months during April along with a decline in shipments.
New orders for durable goods fell 0.7% from the month before, less than analysts expectations, and following a upwardly revised March increase of 2.3%. Shipments slipped 0.3% following a March drop of 0.1%.
Also, a key indicator of business investment, orders for non-defense capital goods minus aircraft, remained flat for the second straight month.
“The March factory orders report showed a 0.5% increase in core …Read the rest of this story
