Growth in the US economy falls back in first quarter

LONDON. April 27. KAZINFORM The pace of US economic growth slowed to an annualised 2.2% in the first quarter of the year, from 3% in the last three months of last year.

The figure was below economists' estimates of 2.5%  and is equivalent to quarter-on-quarter growth of 0.5%.

The US Commerce Department said businesses had cut back on investment, depressing gross domestic product (GDP).

However, a pick-up in the car market supported the growth figure.

Although the headline figure was weaker than had been hoped for, a key driving force in the fourth quarter had been stockpiling by US firms.

This time, demand from consumers was stronger.

Consumer spending, which accounts for about 70% of the US economy, grew by a 2.9% annual rate, the fastest pace since the fourth quarter of 2010, BBC informed.

Motor vehicle sales rose at 2.1% in the fourth quarter, the fastest rate in four years.

Home construction rose at its fastest pace since the second quarter of 2010, boosted by the warmer weather.

There was worse news on business spending, which fell for the first time since the fourth quarter of 2009.

It dropped by 2.1%, a sharp about turn from growth of 5.2% in the fourth quarter.

Investment in equipment and software rose at its slowest pace since the recession ended.

Camilla Sutton, chief currency strategist at Scotia Capital, said there was good and bad in the numbers: "Personal consumption was positive. But overall [the figure was] weaker-than-expected GDP.

"It does open the door for the Fed to remain dovish."

The US central bank, the Federal Reserve, said this week it was happy with its current policy, although there is speculation that the bank may undertake a third round of quantitative easing, referred to as QE3.