US Q1 GDP better than first estimated but still sluggish

US growth did not slow as sharply in the first quarter as initially estimated, according to data released by the Commerce Department.

The second release of data showed US gross domestic product rose at a 0.8% seasonally-adjusted rate in the first quarter, up from the initial estimate of 0.5% but a touch below expectations of 0.9%.

Corporate profits rose 0.3%, but are down nearly 6% in the past year.

Meanwhile, consumer spending was up 1.9%, in line with the initial estimate and outlays on new home construction rose at a rate of 17.1% compared to an initial estimate of 14.8%.

Pantheon Macroeconomics said: “Overall, these data don't materially change our view that second quarter growth will be 3% or better, and they don't fix the very long running statistical problem which tends to depress first quarter GDP growth relative to the trend.

"This, presumably, is why the April FOMC minutes showed that "most" participants believed growth "had likely not deteriorated as much as was suggested by the recent data on spending and production". In other words, when they said they wanted to see evidence of a rebound in Q2, they were pretty sure they would get it.”