WASHINGTON (AP) — The U.S. economy expanded at a slightly faster pace in the spring than previously reported, aided by new-found strength in business construction.
The Commerce Department said Thursday the gross domestic product, the broadest measure of the economy, expanded at an annual pace of 1.4 percent in the April-June quarter. That is up from a previous estimate of 1.1 percent growth. Much of the upward revision reflected an increase in spending on structures such as office buildings.
The modest second quarter gain followed weaker readings of 0.8 percent GDP growth in the first quarter and 0.9 percent in the final three months of last year. Economists, however, believe the economy has accelerated in the current quarter, helped by strong consumer spending.
"Because this revision was largely due to new June data, this suggests that the quarter ended stronger than it started," said Steven Wood of Contingent Macro Research.
The latest GDP reading marked the government's third and final look at the second quarter.
Consumer spending, which accounts for 70 percent of economic activity, grew at a 4.3 percent rate in the second quarter. That is down slightly from a previous estimate of 4.4 percent but still the best showing since late 2014.
The economy slowed sharply in the fourth quarter of last year, and GDP growth has averaged just 1 percent over the past nine months. Much of that weakness reflected a sharp slowdown in the growth of inventories as businesses with unsold goods cut back on restocking their store shelves.
But economists believe the inventory correction has run its course, and inventory restocking will help fuel growth in the second half of this year.
Analysts at Macroeconomic Advisers are forecasting that growth will rebound to 3 percent in the current July-September quarter. They are forecasting a solid 2.4 percent increase in GDP for the final three months of this year.
Federal Reserve Chair Janet Yellen, in an appearance before Congress Wednesday, indicated that the central bank is still on track to boost its key policy rate by the end of this year. The Fed has left the rate unchanged so far this year in response to the weaker-than-expected economic growth both in the United States and the global economy.