The U.S. economy grew at a 1.7% annual rate in the second quarter, buoyed by a solid gain in consumer spending and a sharp increase in business investment, the Commerce Department said. Economists polled by Market Watch had expected growth to total 1.0%. Consumer spending rose 1.8% in the second quarter and business investment jumped 9%, led by another double-digit percentage gain in home construction. Those increases offset a 9.5% spike in imports – a negative for U.S. growth – and a 1.5% drop in federal spending. Inflation as measured by the PCE index was flat overall and rose just 0.8% on a core basis excluding food and energy.
The core increase was the smallest in almost three years. Growth in the first quarter, meanwhile, was revised down to 1.1% from 1.8% as part of the government`s periodic update to how it measures the size of the economy and how fast it`s growing. Yet the new methodology also shows that the U.S. expanded at a 2.8% pace in 2012 instead of 2.2% as originally reported. Most of the historical data on the U.S. economy, however, was little changed. The second-quarter GDP report will be refined through two further updates in the next few months.
U.S. industrial production increased 0.3 percent in June after being unchanged in May. For the second quarter as a whole, industrial production moved up at an annual rate of 0.6 percent, the Federal Reserve said. Production from mines advanced 0.8 percent, double its rate of increase in May. For the second quarter, mining output rose at an annual rate of 4.9 percent after having fallen 0.7 percent in the first quarter. In June, the capacity utilization rate for mining increased 0.3 percentage point to 87.9 percent, a rate 0.6 percentage point above its long-run average.
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