The US recovery suffered a severe setback at the start of the year with the rate of economic expansion far slower than economists had anticipated, according to data released on Wednesday.
US GDP rose by just 0.05pc in the first quarter, well below the 0.2pc expected by analysts and far weaker than the previous quarter's 0.54pc increase. Analysts blamed the strengthening dollar for the poor performance, as the currency's strength hit exports for a fourth consecutive month. The growth data is likely to stay the Federal Reserve's hands in raising interest rates later this year. The FTSE 100 and dollar both lost ground as the data were released. Chris Williamson, chief economist at Markit, said: "A stalling of US economic growth at the start of the year rules out any imminent hiking of interest rates by the Fed. "The slowdown looks temporary, as a rebound from the first quarter weakness is already being signalled by forward-looking survey data, but the sustainability of any upturn is by no means convincing yet." Ahead of the release, analysts at Deutsche Bank said: "The first quarter of the year has been the weakest in recent years, and 2015 is likely to be no exception”. A string of weak first quarter performances has led some economists to question whether the Commerce Department, which releases the figures is "seasonally adjusting" the data correctly. As a result, some believe that the performances in the second to fourth quarters have been overstated. If that proves to be the case again this year, US growth figures should bounce back
No comments:
Post a Comment