US economic growth picks up to 2.3%

The US economy grew at an annualised pace of 2.3% in the three months to June, official figures have shown.

The figure – the first estimate of growth in the second quarter – followed an upwardly revised growth rate of 0.6% in the first three months of the year.

The Commerce Department said growth was boosted by increased consumer spending and cheaper fuel prices.

Analysts said the figure could make the US Federal Reserve more likely to raise interest rates in September.

The 2.3% annualised growth rate is equivalent to 0.6% growth quarter-on-quarter, as measured in most other countries. For example, on Tuesday, official figures showed that the UK economy grew by an estimated 0.7% in the April-to-June period from the previous quarter.

“Updated GDP numbers deliver a double-punch to US economy doom-mongers, painting a reassuringly bright picture of the health of the US economy so far this year and raising the odds of the Fed hiking interest rates in September,” said Chris Williamson, chief economist at research firm Markit.

The 0.6% annualised growth rate for the first quarter of the year was an improvement on the previous estimate of a 0.2% contraction.

Consumer spending – a key driver of the US economy – grew at a rate of 2.9% in the second quarter, compared with 1.8% in the first three months of the year.

Recent figures have shown the US economy creating more than 200,000 jobs a month, and the unemployment rate has now dropped to 5.3%.

“The improving job market, alongside the boon to households from low inflation and falling oil prices, has been key to the economy’s ability to sustain strong growth,” Mr Williamson said.

The latest figures fit with the pattern seen since the recession ended six years ago: weak growth at the start of the year, followed by a rebound in spring and summer.

But the annualised growth rate for the second quarter was weaker than the 2.7% expected by economists and overall, the recovery has been slow.

The Commerce Department also downgraded its estimates for US growth between 2011 and 2014, saying the economy expanded at an average annual rate of 2% rather than the 2.3% previously forecast, underlining the tepid expansion.

“The pace for growth remains extremely weak by past recovery standards, but with potential growth weaker as well, it appears to be more than sufficient to keep the unemployment rate coming down,” Jim O’Sullivan, chief US economist at High Frequency Economics, said.

[SOURCE- “bbc.com”]