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US economic growth slows to 0.5% in first quarter of 2016 | US economic growth slows to 0.5% in first quarter of 2016 |
(35 minutes later) | |
US economic growth slowed to an annual pace of 0.5% during the first three months of the year. | US economic growth slowed to an annual pace of 0.5% during the first three months of the year. |
That was a sharp fall from the 1.4% rate of growth in the last quarter of 2015 and the slowest pace in two years. | That was a sharp fall from the 1.4% rate of growth in the last quarter of 2015 and the slowest pace in two years. |
The slowdown, which was bigger than most economists forecast, has been blamed on a fall in domestic demand and a strong dollar that has put a brake on exports. | The slowdown, which was bigger than most economists forecast, has been blamed on a fall in domestic demand and a strong dollar that has put a brake on exports. |
With shoppers buying less, businesses have been reluctant to order new stock. | With shoppers buying less, businesses have been reluctant to order new stock. |
Consumer spending, which accounts for more than two-thirds of the US economy, increased at a rate of 1.9%, down from 2.4% in the previous quarter. | Consumer spending, which accounts for more than two-thirds of the US economy, increased at a rate of 1.9%, down from 2.4% in the previous quarter. |
Business investment fell by 5.9% - the biggest quarterly decline since the depths of the financial crisis in 2009. | Business investment fell by 5.9% - the biggest quarterly decline since the depths of the financial crisis in 2009. |
Oil and gas exploration fell by a record 86% as energy companies cut back on spending following the dramatic slide in oil prices. | Oil and gas exploration fell by a record 86% as energy companies cut back on spending following the dramatic slide in oil prices. |
Although cheaper oil has given consumers more spare cash, it has also cut the profits of businesses dependent on the oil industry. | Although cheaper oil has given consumers more spare cash, it has also cut the profits of businesses dependent on the oil industry. |
Most forecasters predict the US economy will bounce back in the next quarter, but Chris Williamson of Markit said his company's own surveys showed only a weak recovery. | |
"Worryingly, the surveys indicate that the malaise affecting the US economy has extended into the second quarter, albeit with the pace of expansion picking up slightly to 0.8%. The surveys also show weakness spreading from manufacturing to services in recent months." | |
Despite the economy slowing, unemployment fell below 5% in January, and Friday's jobs report is expected to show steady growth in employment numbers. | Despite the economy slowing, unemployment fell below 5% in January, and Friday's jobs report is expected to show steady growth in employment numbers. |
On Thursday, the Federal Reserve said that "labour market conditions have improved further even as growth in economic activity appears to have slowed". |
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