WASHINGTON: A final estimate of first quarter growth confirmed the US economy expanded by a rapid 6.4% annualised in the period from January to March of this year, the government said on Thursday.
The figure was unchanged from the initial estimate in late April, the Commerce Department said, and represents the last of two revisions made to growth figures the US government releases each quarter.
The measure, which shows how fast the economy would expand if the growth rate continued for a full year, was the fastest first quarter gain since January-March 1984, and came after the Covid-19 pandemic caused a 3.5% contraction in 2020 – the worst since modern recordkeeping began in 1946.
Rubeela Farooqi of High Frequency Economics said there would likely be a strong expansion in the April-June second quarter as well, but the rate could flag later in 2021 as government stimulus measures end.
“There is less certainty further out; even as a better health backdrop and a pick (up) in job growth should be supportive of GDP, fading support from fiscal measures could be a headwind in the second half,“ she said in an analysis.
Markets and policymakers are paying particularly close attention to inflation amid an ongoing debate over whether prices will spike persistently as the economy bounces back from the pandemic, or if the increases will prove to be temporary.
The data showed a key inflation measure at 3.7% in the first quarter, unchanged from the second revision of the data in May and above the Federal Reserve's 2% target. Excluding volatile food and energy prices, inflation was at 2.5%.
In the job scene, new applications for US unemployment benefits edged lower last week, resuming a downward trend, but lingering above 400,000 claims.
Jobless claims came in at 411,000, seasonally adjusted, down 7,000 from the previous week's revised level, according to Labor Department data.
Last week's claims unexpectedly snapped a six-week streak of declines, lifting the level back above 400,000 after the June 3 weekly report came in below that level for the first time since the pandemic.
For the week ending June 5, the total number of people receiving aid under all programmes crept up by 3,756 to over 14.8 million. The level was 31.3 million in the year-ago period.
Rubeela Farooqi, chief US economist at High Frequency Economics, called the number of new claims “surprisingly high” given that the economy continues to reopen.
“For businesses, labour shortages remain an issue as a ramping up of activity is resulting in supply/demand imbalances,“ Farooqi said in a note. “But these frictions should ease as health concerns subside, schools reopen and enhanced benefits end.”
Separately, the Commerce Department said orders for big-ticket manufactured goods grew in May after contracting the month before, with transport orders leading the increase.
Durable goods orders rose 2.3% to US$253.3 billion last month,, slightly less than expected but an improvement on the 0.8% upwardly revised decrease seen in April.
Transport equipment made up the majority of the increase, ending two months of declines with a 7.6% gain to US$74.2 billion. Orders for non-defence aircraft and parts, like Boeing's airplanes, grew 27.4%.
Excluding transport, durable goods orders rose 0.3%, weaker than expected.
“Total durable goods orders rose less than expected in May although the gain more than reversed a decline in April,“ Farooqi said.
“Strong demand and lean inventories are still supportive of the manufacturing sector. But supply bottlenecks and a rotation from goods to services could be constraints over coming months.”
Capital goods saw strong growth, with a 4.2% increase in orders. Defence capital goods rose 17.4%.
Motor vehicles and parts, which are part of transport equipment, grew 2.1%, even as the sector battles an ongoing shortage of semiconductors that fuelled an 8.1% drop in April.
Computers and electronic product orders declined 0.3%, with 1.9% growth in communications equipment offset by a 1.4% decline in computers and related products.
“Manufacturing is in good health,“ Ian Shepherdson of Pantheon Macroeconomics said. “Surveys suggest that activity in the sector is no longer accelerating, but growth is strong.” – AFP
Source: The Sun Daily
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