US GDP revised down to 3.3 percent, outlook weaker

Dark clouds continue to gather over the world economy.

In the US, second quarter GDP growth has been revised down. Reuters reports:

U.S. gross domestic product, a measure of all goods and services produced within U.S. borders, grew at a revised 3.3 percent annual rate in the April-June period after a 3.8 percent first-quarter gain, the Commerce Department said.

In its first snapshot a month ago, the department had put second-quarter growth at 3.4 percent, a figure economists had expected to be nudged up to 3.5 percent.

The report showed businesses built inventories slightly, in contrast to a month ago when inventories were thought to have dropped. Economists said this implied a little less pickup in production ahead for an economy that appears set to take at least a temporary hit from soaring energy prices.

More ominously, the Chicago PMI plunged below 50 in August.

The National Association of Purchasing Management-Chicago business barometer plunged from 63.5 in July to 49.2 in August, its lowest level since April 2003 and the biggest decline in the 37-year history of the indicator.

The new orders component of the index crumbled to 46.5 from from 69.6 in July, its biggest one-month fall ever. The prices paid component rose to 62.9 from 61.3 -- less than some had expected given the recent spike in prices of energy and other commodities... The employment index fell to 51.7 from 56.1 in July.

Europe's latest estimated second quarter GDP growth of 0.3 percent for both the euro-zone and the EU25 shows no change from flash estimates. Euro-zone inflation in August is estimated at 2.1 percent, slightly down from July's 2.2 percent.

The UK saw the GfK's consumer confidence barometer fall to -4 in August from -1 in July. However, on Monday, GfK's index of consumer confidence for Germany had been reported to have risen to 3.4 points from a revised 3.2 the month before. And yesterday came news that unemployment declined in Germany and France, falling by 12,000 in Germany in August and 30,000 in France in July.

And the news coming out of Asia today is also somewhat mixed. South Korean manufacturers' confidence rose to a four-month high in August as an index of manufacturers' expectations for the month ahead stood at 85 compared with 78 in July, but listed companies in China have reported slower profit growth for the first half of 2005 in the face of rising costs.