WASHINGTON - Second quarter gross domestic product growth was revised up to a 1.4% annual rate from the 1.1% pace in the second estimate, compared with expectations for a 1.3% increase, data released Thursday by the Bureau of Economic Analysis showed.
Despite the upward revision, the data does little to alter the picture of a weak quarter that should give way to improvement in the third quarter with an increase closer to 2.5%.
The upward adjustment to 2Q growth was due to a strong upward adjustment in nonresidential fixed investment, mainly structures. Also, the inventory drag was revised to be smaller, and an upward adjustment to exports and a downward revision to imports resulted in a narrower net export gap than previously estimated.
Offsetting these upward revisions were a small downward adjustment to PCE growth and larger government spending drag than in the second estimate. Residential fixed investment was unrevised at a 7.7% decline.
The data still point to strong PCE growth in the second quarter, but recent retail sales suggest the pace of consumption may slow a bit in the third quarter. However, the still-weak inventory number for the second quarter, which came after positive inventory contributions in previous four quarters, could add to production in third if sales pick back up.
Real final sales were revised up slightly to a 2.6% gain from the 2.4% gain reported in the second estimate.
Gross domestic income revised down to a 0.2% rate of decline from the 0.2% rate of growth previously reported. The upward revision to real GDP and the downward revision to GDI kept the GDP/GDI average at a 0.6% gain, unrevised from the second estimate.
The chain price index was unrevised at a 2.3% gain in the second quarter, still well ahead of the 0.5% increase in the first quarter.
The closely watched core PCE price index was also unrevised, staying at a 1.8% annual rate and putting the year/year rate at 1.6%.
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