Thursday August 27, 02:22 PM
US economic contraction unrevised at 1%
WASHINGTON (AFP) - The US economy shrank at a 1.0 percent annual pace in the second quarter, the government said Thursday, leaving unrevised an estimate from a month earlier.
The figure for gross domestic product was better than expected by analysts, who had forecast a revision showing a 1.5 percent pace of decline for the recession-bound economy.
The Commerce Department figures showed an easing of the deep recession that led to a 6.4 percent pace of decline in the first quarter.
The revision showed a drop of 1.0 percent in consumer spending, the main driver of economic activity, instead of the prior estimate of a 1.2 percent decline.
Motor vehicle output added 0.20 percentage points to the GDP after subtracting 1.69 percentage points from the first-quarter change.
Federal government spending increased 11.0 percent in the second quarter, in contrast to a decrease of 4.3 percent in the first.
The housing sector remained a drag on the economy, with real residential fixed investment falling 22.8 percent, compared with a decrease of 38.2 percent in the prior quarter.
Exports fell 5.0 percent while imports decreased 15.1 percent -- a phenomenon that contributes to GDP because it means more production is domestic based.
A big drawdown in inventories subtracted from growth, although economists say this opens the way for increased activity because businesses will need to rebuild stockpiles.
The change in inventories subtracted 1.39 percentage points from second-quarter GDP, after taking away 2.36 percentage points in the first quarter.
Real (Frankfurt: BJU.F - news) final sales of domestic product -- a key reading of economic activity that strips out inventory adjustments -- showed a 0.4 percent drop in the second quarter, revised from last month's estimate of a 0.2 percent decline.
"The second quarter figure reflected selling off of inventory and sharply declining residential and nonresidential investment, as well as lower personal consumption expenditures and exports," said Ed Friedman at Moody's Economy.com.
"Partial offsets were contributions from government spending at all levels."
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