US economic growth in the second quarter was slower than expected. Bloomberg reports:
The U.S. economy grew less than forecast in the second quarter, after almost stalling at the start of the year, as consumers retrenched.
Gross domestic product climbed at a 1.3 percent annual rate following a 0.4 percent gain in the prior quarter that was less than earlier estimated, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 1.8 percent increase. Household purchases, about 70 percent of the economy, rose 0.1 percent...
Economic growth in the first quarter was revised down from a 1.9 percent prior estimate, reflecting fewer inventories and more imports, the Commerce Department’s report showed. At $13.27 trillion in the second quarter, GDP has yet to surpass the pre- recession peak.
Revisions to GDP figures going back to 2003 showed that the 2007-2009 recession took a bigger bite out of the economy than previously estimated, and the recovery lost momentum throughout 2010. The world’s largest economy shrank 5.1 percent from the fourth quarter of 2007 to the second quarter of 2009, compared with the previously reported 4.1 percent drop.
The third quarter has not started too well either.
The Institute for Supply Management-Chicago Inc. said its business barometer fell to 58.8 in July from 61.1 the prior month. Figures greater than 50 signal expansion.
The Thomson Reuters/University of Michigan final index of consumer sentiment fell to 63.7 this month, the weakest since March 2009, from 71.5 in June.
However, slower economic growth worldwide may have helped to restrain inflation. Bloomberg reports the latest inflation rate in the euro area:
Euro-region inflation unexpectedly slowed in July, though it remained above the European Central Bank’s 2 percent ceiling for an eighth month as rising energy prices added pressure on companies to pass on higher costs.
The inflation rate in the 17-nation euro region declined to 2.5 percent from 2.7 percent in the previous month, the European Union’s statistics office in Luxembourg said today in an initial estimate. Economists expected price growth to hold steady, the median of 31 forecasts in a Bloomberg News survey showed.
Meanwhile, the drag on the world economy from Japan's earthquake and tsunami disaster may be dissipating. Reuters reports another increase in Japan's manufacturing PMI in July:
Japanese manufacturing activity expanded in July at the fastest pace in five months as supply chains recovered from the March 11 disaster and companies brought forward production to avoid possible power shortages in the summer, a survey showed on Friday.
The Markit/JMMA Japan Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 52.1 in July from 50.7 in June. The index remained above the 50 threshold that separates contraction from expansion for a third straight month and rose to its highest since February.
The output component of the PMI index rose to 53.1 in July from 52.7 in June, also the highest since February.
Corroborating the signs of Japanese recovery was another report on Friday indicating an increase in industrial production in June. From AFP/CNA:
Japan's industrial production rose 3.9 per cent in June from the previous month, reflecting a continued recovery in earthquake-hit supply chains following the March 11 earthquake and tsunami...
The ministry added that production levels were expected to continue to rise in July and August, although analysts warn that power consumption curbs in the summer months add a layer of uncertainty to estimates.
The June figure marked a slower pace of growth than May, which saw output rise 6.2 per cent.
Other data from Japan, though, were not as positive.
Further data on [F]riday showed that Japanese consumers remained cautious as household spending fell 4.2 per cent in June, a steeper decline than market expectations of a 2.0 per cent drop.
It had plunged 8.5 per cent in March while the pace of decline eased in April and May by 3.0 per cent and 1.9 per cent...
Other data Friday showed Japan's core consumer prices rose 0.4 per cent in June from a year earlier, slightly less than market expectations of a 0.5 per cent gain...
Separate data showed Japan's unemployment rate rose to 4.6 per cent in June, up 0.1 percentage points from the previous month, excluding figures from the disaster-hit northeast of the country.