US growth in Q1 revised upwards to 0.8%

WASHINGTON • The United States economy expanded at a slightly faster pace in the first quarter than previously estimated, reflecting less damage from trade and inventories.

The Gross Domestic Product (GDP) rose at a 0.8 per cent annualised rate in the three months ended in March, the smallest gain in a year, Commerce Department figures showed yesterday. That compares with the 0.5 per cent advance the government reported last month.

The figures do little to alter views of the third consecutive sluggish start to the year, and could portend a tougher slog in the second quarter as businesses work to continue to pare stockpiles.

At the same time, household income gains were stronger than previously reported as the labour market strengthened, which will help support consumer spending.

"It's still a very poor start to the year," Mr Ryan Sweet, a senior economist at Moody's Analytics Inc said before the report. "From past experience we get most of that back in the second quarter."

This is the second of three estimates for the quarter before annual revisions in July.

The report included revisions to fourth-quarter personal income that showed pay accelerated even more than previously estimated.

Wages and salaries grew by US$125.5 billion (S$173 billion), the biggest quarterly gain in almost two years and up from the US$81.7 billion gain previously reported.

After-tax personal income adjusted for inflation climbed at a 4 per cent annualised rate in the first quarter, revised up from a prior estimate of 2.9 per cent. The saving rate was also pushed up to 5.7 per cent, the highest since the fourth quarter of 2012, from 5.2 per cent.

The figures also offered a first look at corporate profits. Before-tax earnings rose 0.3 per cent from the prior quarter, but were down 5.8 per cent from the same time last year.

The economy has been hurt by a strong dollar, sluggish global demand and lower oil prices. But, there are signs it regained momentum early in the second quarter, with retail sales, goods exports, industrial production, housing starts and home sales surging in April.

The Atlanta Federal Reserve is currently estimating second-quarter GDP rising at a 2.9 per cent rate.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on May 28, 2016, with the headline 'US growth in Q1 revised upwards to 0.8%'. Print Edition | Subscribe