The latest estimate of US GDP released on Thursday showed that the economy shrank at a 1.0 percent annualised rate in the first quarter.
Inventory accumulation was the major contributor to the decline in GDP, taking 1.6 percentage points off the growth rate. Business investment also fell at a 1.6 percent annualised rate.
Consumer spending, however, grew at a 3.1 percent rate.
Corporate profits fell 9.8 percent from the previous three months, the biggest decline since 2008, and declined 3 percent from the same period last year.
While the contraction in the economy in the first quarter is obviously a negative, the fact that it was mainly driven by inventory suggests that there could be a rebound in the second quarter.
Meanwhile, the US housing market is already showing signs of a rebound. A report from the National Association of Realtors on Thursday showed that pending home sales rose 0.4 percent in April, the second consecutive monthly increase.
Investors focused on the positive on Thursday, pushing the S&P 500 up 0.5 percent to another record high.
The latest economic data for the eurozone economy have also been positive.
A report from the European Commission on Wednesday showed that its economic sentiment indicator for the euro area rose to 102.7 in May from 102.0 in April.
No comments:
Post a Comment