US economic growth slows less than expected in Q2

Economic growth in the US slowed in the second quarter, according to preliminary figures released on Friday by the Commerce Department, albeit less than expected.

Real gross domestic product rose at an annual rate of 2.1% in the second quarter of this year, down from 3.1% growth in the first three months of the year but ahead of expectations of 1.8% growth.

Paul Ashworth, chief US economist at Capital Economics, said the drop-off would have been even bigger if not for a surprisingly strong gain in government expenditure.

"In short, this slowdown just about justifies a 25 basis points cut by the Fed next week, but the chances of a bigger 50bp reduction just receded further," he said.

Neil Wilson, chief market analyst at Markets.com, said this was "something of a Goldilocks GDP number", solid but not hot enough to stop the Fed from cutting rates next week.

"What it does (should?) suggest is that we are more likely to see next week’s cut as fine-tuning rather the start of an easing cycle that involves several cuts. The only problem with that is the Fed will instantly come under attack from both the markets and Trump.

"The growth number just confirms a sense that the Fed is no longer data dependent, but at the mercy of tantrums - both in financial markets and the White House."