US GDP growth better than expected

US economic growth was less sluggish than previously thought in the second quarter as exports grew more than imports and businesses raised their investments, hopeful signs for the economic outlook.

GDP expanded at a 1.4% annual rate, the US Commerce Department said yesterday, in its third estimate of GDP. That was up from the 1.1% rate it reported last month and higher than analysts’ expectations.

The revision incorporated data that showed businesses cut investments in buildings and equipment less than the American government previously estimated, while they sank more money into R&D.

That left growth in overall business investment at a 1% annual rate, its first gain since the third quarter, and suggests the worst of an energy-sector-led slump in business investment might be over.

The slump, fuelled by a sharp drop in oil prices that hit America’s energy industry, has worried policymakers at the Federal Reserve because less investment could hurt economic growth over the longer term.

The US economy has struggled to regain momentum since output started slowing in the last six months of 2015 and the overall growth rate for GDP in the second quarter remained below historically normal rates.

That could give grist to Republican presidential candidate Donald Trump’s argument that the economy has sickened under the Obama administration.

The dollar appreciated slightly against a basket of currencies while yields on US government debt edged higher.


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