US GDP growth beats in Q1 as price pressures pick-up

The US economy held up better-than-expected at the start of the year amid quickening price pressures.

Over the first three months of 2018, the pace of expansion slipped from the 2.9% pace observed at the end of 2017 to 2.3%, but was nevertheless stronger than economists' median forecast of 2.1%.

According to the Commerce Department, personal consumption expenditures accounted for the bulk of the slowdown in gross domestic product, with the rate of growth slowing from 4.0% to 1.1%.

However, government spending also cooled significantly, from a 3.0% pace in the fourth quarter to 1.2% over the three months to 31 March.

Yet price pressures, which tend to lag economic activity, picked-up, with the 'core' price deflator for personal consumption expenditures printing at an annualised clip of 2.5% (consensus: 2.4%).

In a boost to growth, net trade added 0.2 percentage points to the quarterly rate of growth and the rate of change to inventories another 0.43 points, after having subtracted a combined 1.69 points in the fourth quarter.

Non-residential fixed investment was also solid, with growth clocking in at a 6.1% pace, which was only slightly less than 6.8% clip observed over the last three months.

Within that, business fixed investment was up by 4.7%, after hitting its quickest pace of the last three years, of 11.6%, during the prior quarter.

Investment in non-residential structures meanwhile was up by 12.3%, its fastest in a year.

Final domestic sales, which strips out the contributions from inventories and trade, grew at a 1.6% clip, down from the 4.5% pace seen over the prior quarter.