US third-quarter growth trimmed; business spending slowing

WASHINGTON: The US economy slowed slightly more than previously estimated in the third quarter and momentum appears to have moderated further in the fourth quarter, with new orders and shipments of manufactured capital goods falling in November. Growth in the October-December quarter could still be strong and keep the economy on track to achieve the Trump administration’s 3 per cent target this year. Consumer spending, which accounts for more than two-thirds of the US economy increased solidly in November, other data showed.

“Business spending looks to be losing momentum, placing the onus on households to keep the economic expansion going at a decent rate,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. Gross domestic product increased at a 3.4 per cent annualised rate, the Commerce Department said in its third reading of third-quarter GDP growth. That was slightly down from the 3.5 per cent pace estimated last month and above the economy’s growth potential, which economists estimate to be about 2 per cent.

The revision to the third-quarter GDP reading reflected markdowns to consumer spending and exports. Estimates for business spending on equipment and nonresidential structures were lowered as were those for residential investment. Those downward revisions were, however, partially offset by a larger accumulation of inventory than previously estimated. The economy grew at a 4.2 per cent pace in the April-June quarter. The Federal Reserve raised interest rates on Wednesday for the fourth time this year, but forecast fewer rate hikes next year and signaled its tightening cycle is nearing an end in the face of financial market volatility and slowing global growth. The US central bank slightly lowered its growth projections for 2019. — Reuters