United States GDP grew slightly more than initially expected in the first quarter of 2016, and durable goods orders ticked up in April, according to the most recent data from the Department of Commerce.
The United States economy grew more than initially expected in the first quarter of 2016, according to a “second” preliminary estimate issued by the U.S. Commerce Department on Friday.
U.S. gross domestic product (GDP) – the broadest measure of a nation’s overall economic health – increased 0.8 percent during the quarter, down from a 1.4 percent advance in the fourth quarter of 2015. Gross domestic product is a calculation of the value of the goods and services produced by a nation’s economy minus the value of the goods and services used up in production.
Commerce’s initial estimate released last month showed the economy increasing only 0.5 percent, which would have been the slowest pace in two years.
The department’s Bureau of Economic Analysis said the tepid first quarter GDP growth was driven primarily by positive contributions from personal consumption expenditures, residential fixed investment, and state and local government spending, and a decrease in imports. Those impacts were partly offset by negative contributions from nonresidential fixed investment, exports, private inventory investment, and federal government spending.
Real exports of goods and services dipped 2 percent in the first quarter, and imports, which are a subtraction in the calculation of GDP, slipped 0.2 percent, according to BEA. U.S. export growth has been held in check by a strong dollar, which makes U.S. exports more expensive and, therefore, less desirable abroad, as well as declining demand in China and Europe.
For the full year in 2015, U.S. GDP increased 2.4 percent – the same rate as in 2014.
“One of the most interesting developments is this upward revision to wages and salaries for the fourth quarter,” RBS Securities Inc. economist Kevin Cummins told Bloomberg. “It’s certainly not booming by any stretch, but we do expect above-trend growth for the next few quarters, led by the consumer and the health of the labor market.”
“It’s still a very poor start to the year, but there’s a lot of measurement issues still plaguing first-quarter GDP,” added Ryan Sweet, a senior economist at Moody’s Analytics Inc. “From past experience we get most of that back in the second quarter.”
Additional new data from Commerce underscores a slight uptick in the manufacturing sector.
New orders for durable goods in April grew 3.4 percent, or $7.7 billion, to $235.9 billion, according to an advance estimate from the Census Bureau. The increase follows a revised 1.9 percent bump in March that was proceeded by decreases in three of the previous four months.
January durable goods orders showed 4.3 percent growth, but came on the heels of a 4.6 percent decrease in December 2015 and a 0.5 percent decline in November. Orders in February fell another 3.1 percent.
Transportation equipment again led the April increase, up 8.9 percent, or $7.1 billion, to $87.1 billion.
U.S. economy showing signs of life after rough start to the year
