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| US economy sees stronger growth | US economy sees stronger growth |
| (about 1 hour later) | |
| The US economy grew faster than expected over the past three months, figures have shown, recording the best quarterly performance since early 2006. | The US economy grew faster than expected over the past three months, figures have shown, recording the best quarterly performance since early 2006. |
| The economy grew by 3.4% on an annual basis, bouncing back from a dismal first quarter where it grew just 0.6%. | The economy grew by 3.4% on an annual basis, bouncing back from a dismal first quarter where it grew just 0.6%. |
| The figures were keenly anticipated following signs that the slump in the US housing market has been having a negative impact on the wider economy. | The figures were keenly anticipated following signs that the slump in the US housing market has been having a negative impact on the wider economy. |
| The figure exceeded expectations by analysts who expected a 3.2% increase. | The figure exceeded expectations by analysts who expected a 3.2% increase. |
| And the data may help to steady stock markets which have fallen heavily in the past 24 hours on fears of a credit crunch spreading from the US housing sector. | And the data may help to steady stock markets which have fallen heavily in the past 24 hours on fears of a credit crunch spreading from the US housing sector. |
| A separate report showed that consumer sentiment has also improved, although a little less quickly than many analysts had predicted. | |
| According to Reuters and the University of Michigan, their consumer sentiment index was 90.4 in July, up from a 85.3 in June. | |
| Consumer weakness | Consumer weakness |
| Nevertheless, the sentiment and economic figures masked a further deterioration in consumer spending between April and June and continued weakness in the housing market. | |
| The rate of growth in consumer expenditure slowed to 1.3% from 4.2% earlier in the year, reflecting growing caution among households about the economic outlook. | The rate of growth in consumer expenditure slowed to 1.3% from 4.2% earlier in the year, reflecting growing caution among households about the economic outlook. |
| Investment in house building fell 9.3% on an annual basis, although the fall was less severe than the 15.8% decline seen in the first quarter. | Investment in house building fell 9.3% on an annual basis, although the fall was less severe than the 15.8% decline seen in the first quarter. |
| This report says the economy is OK Rudy Narvas, 4 Cast Limited | This report says the economy is OK Rudy Narvas, 4 Cast Limited |
| General economic activity was boosted by strength in business investment, government spending and rising exports. | General economic activity was boosted by strength in business investment, government spending and rising exports. |
| At the same time, core consumer prices - excluding food and energy - rose by 1.4% over the period, their slowest quarterly rate of growth since 2003. | At the same time, core consumer prices - excluding food and energy - rose by 1.4% over the period, their slowest quarterly rate of growth since 2003. |
| Analysts said the figures should give some reassurance to volatile equity markets. | Analysts said the figures should give some reassurance to volatile equity markets. |
| "There are an awful lot of concerns out there about growth," said Rudy Narvas, a senior bond analyst from 4 Cast Limited. | "There are an awful lot of concerns out there about growth," said Rudy Narvas, a senior bond analyst from 4 Cast Limited. |
| "This report says the economy is OK." | "This report says the economy is OK." |
| The US Federal Reserve is anticipating somewhat stronger growth in the second half of 2007 but has still revised downwards its full-year growth forecast to between 2.25% and 2.5% after the slowdown earlier this year. | The US Federal Reserve is anticipating somewhat stronger growth in the second half of 2007 but has still revised downwards its full-year growth forecast to between 2.25% and 2.5% after the slowdown earlier this year. |
| The Fed has kept interest rates on hold at 5.25% for several months as it balances concerns over the extent of the housing slump with signs that inflationary pressures may be easing. | The Fed has kept interest rates on hold at 5.25% for several months as it balances concerns over the extent of the housing slump with signs that inflationary pressures may be easing. |