USA economy bounces back from weak first quarter


US real gross domestic product grew at an annual rate of 2.6% in the second quarter, according to the "advance" estimate of GDP growth released today by the US Commerce Department.

Second-quarter growth more than doubled the sluggish pace from the first three months of the year.

Year-over-year growth in the Canadian economy in May was the best since 2000 in an upbeat signal for the loonie and a hawkish sign for the Bank of Canada.

Growth was huge in oil and gas extraction with 7.1% countering the increase of 1.1% in manufacturing sectors.

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The revision shows slightly better growth in the US economy that previously reported, raising the average growth during the recovery from recession following the 2008 economic crisis to 2.2 percent. "We're doing well. We're doing really well". Residential fixed investment dropped at a 6.8% pace, the sharpest decline since 2010.

The index, which is a broader measure of inflation, dropped sharply to 1% quarter-on-quarter from 2% (upwardly revised from 1.9%), missing the forecast of 1.3% and reaching the weakest growth in a year.

All of the changes boosted growth a slight 0.1 percentage point over the three-year period. Consumers stepped up spending on both goods and services, possibly reflecting a broadly positive outlook since the election.

Overall, the economy expanded at an annual rate of 1.9 percent in the first half of 2017, just a tad slower than the 2.3 percent average annual gain recorded from 2013 to 2016.

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The economy also benefited far more modest inventory reductions, which had been a drag on growth during the first quarter. Most promisingly, equipment spending soared in the latest data to its fastest pace since the third quarter of 2015, up 8.2 percent, with 4.9 percent growth in structures spending. Federal government spending provided a significant boost (2.3% increase), although that reflects a lot of defense spending (5.2% increase). Annual wage growth has struggled to break above 2.5 per cent.

In contrast, the United Kingdom delivered GDP growth of 0.3 per cent earlier this week.

Prices of U.S. government debt rose after the release of the data while the dollar initially fell against a basket of currencies.United States stock index futures pared losses slightly.

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