WASHINGTON — Third quarter GDP rose 3.0% in the advance estimate, stronger than the 2.7% pace expected, with growth led by a stronger gain in inventories, a narrower trade gap, and positive gains for PCE and nonresidential fixed investment despite a decline in structure investment, data released Friday by the Bureau of Economic Analysis showed.
The core PCE price index rose 1.3% in the third quarter after a 0.9% increase in the second quarter. On a year/year basis, third quarter core PCE prices were up 1.3% from a year earlier following a 1.5% year/year rise in the second quarter and a 1.8% year/year gain in the first quarter. The third quarter year/year pace was the slowest since the fourth quarter of 2015.
The overall GDP price index was up 2.2% in the third quarter after 1.0% pace of growth for the second quarter, stronger than the 1.8% gain expected.
The BEA acknowledged the devastation from the hurricanes, but said it could not quantify the exact impact on the data. It noted that Hurricane Maria affected Puerto Rico and the Virgin Islands, which are not included in GDP estimates, no impact from Maria is reflected in the data.
Inventories were up $35.8 billion in the third quarter after a $5.5 billion gain in the second quarter, continuing a string of gains. When the inventory component is removed, real final sales rose 2.3% after a 2.9% gain in the second quarter.
PCE was up 2.4% in the third quarter after a 3.3% surge in the second quarter. The gain in third quarter PCE was led by durables PCE, which was up 8.3% after a 7.6% second-quarter gain. Nondurables PCE was up 2.1% in the third quarter compared with a 4.2% rise in the second quarter, while services PCE slowed to a 1.5% growth rate from 2.3% in the previous quarter.
Nonresidential fixed investment rose by 3.9% in the third quarter, down from a 6.7% gain in the second quarter, due in large part to a 5.2% decline in structures. Equipment and intellectual property investment were both up.
The net export gap narrowed to $595.5 billion for the third quarter from $613.6 billion in the second quarter.
Residential fixed investment fell 6.0% in the third quarter, after a 7.3% decline in the second quarter.
Government spending was down 0.1% in the third quarter after a 0.2% decline in the second quarter.
