US GDP bounces back more than expected in the second quarter

The American economy bounced back more strongly than had been thought to be the case in the three months to June after a weak start to the year.

US gross domestic product expanded at an annualised pace of 3.9% in the second quarter, according to the third and final estimate from the Department of Commerce.

That followed anaemic growth in the first three months of 2015 as a result of adverse weather and reduced investment in the country’s shale oil industry after the price of crude plummeted. Statistical distortions linked to seasonal factors were also thought by many analysts to have played a hand.

Economists had pencilled in an advance of 3.7%, unchanged from the prior estimate by the bean counters at the Bureau of Economic Analysis.

US consumer spending sped ahead by 3.6% (Barclays: 3.5%), an improvement on the 3.1% previously estimated.

Investment in residential construction also grew more quickly than had been thought, rising by 9.3% instead of 7.8%.

Private sector inventories made no contribution to GDP growth, down from the 0.2 percentage points calculated previously.

Public sector outlays increased by an unchanged 2.6%, tacking on 0.5 percentage points to the rate of growth in GDP.

Net exports also added 0.2 percentage points to the quarterly annualised rate of GDP growth, in line with the BEA's second estimate.

"Headline growth is likely to be held back by a slower pace of inventory investment in Q3, but we are tracking real final sales growth of 3.4%. This morning’s data have no substantive effect on our tracking estimate, and we continue to look for GDP growth of 2.5% from Q4 through late next year," Barclays said in a research report sent to clients following today's release.