US Q2 GDP revised slightly higher

The US economy shrank by less than previously estimated over the three months to June, revised data showed.

According to the Department of Commerce, gross domestic product shrank at a quarterly annualised pace of -0.6% in the second quarter (consensus:-0.5%).

Commerce had initially estimated a 0.9% drop.

An upwards revision to growth in household consumption from 1.0% to 1.5% drove Thursday's revisions.

The growth rate in GDP final sales, which is GDP minus the change in private inventories, was marked higher as well as a result, from 1.1% to 1.3%.

Corporate profit growth meanwhile rebounded to 10.4%, versus the 1.0% rise observed over the first quarter, Commerce said.

Estimates for the rise in the headline and core price deflators for personal consumption expenditures were unchanged at up by 7.1% and 4.4%, respectively.

For Michael Pearce, senior US economist at Capital Economics, the "bigger" news from Thursday's release was the first estimate for gross domestic income growth, which printed at 1.4% annualised versus 1.8% during the first three months of the year.

Nonetheless, the gap between GDP and GDI growth had continued to widen, with GDP standing 2.6% above its pre-Covid-19 level and GDI ahead by 6.4%.

"The gap between the two has never been wider. With the benchmark revision pointing to an upward revision in payroll employment up to the first quarter [on Wednesday], it seems more likely that GDP will be revised substantially higher rather than the GDI figures being revised down," he said.

"But we will have to wait until the annual benchmark revision to the GDP figures, released on 29th September, to find out."