US Economic Update: 2016 Q2 GDP

In the June quarter 2016, US GDP grew by an annualised 1.2% qoq. This was a little stronger than the 0.8% qoq growth recorded in the March quarter, but still a relatively soft rate of growth and below expectations.

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GDP growth soft again in the June quarter but underlying trend better

US GDP growth remained soft in the June quarter. Consumption grew strongly, but business and residential investment, as well as government demand, all detracted from growth. In particular, business cut back on inventories, continuing the recent inventory correction. However, domestic demand continues to grow at around the average pace seen since the last recession, suggesting a stronger underlying economy than the headline GDP number indicates, although weak productivity growth remains a concern.

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