US first quarter growth revised down to 3.1 per cent
US first quarter economic growth was revised down slightly to an annualised rate of 3.1 per cent, according to the second estimate released today by the country’s Bureau of Economic Analysis (BEA).
Read more: Global markets sink into the red as technology front opens up in trade war
The annualised growth rate is nonetheless one of the strongest out of the world’s major economies, and a significant increase from the 2.2 per cent annual rate seen in the final quarter of 2018.
The strong GDP reading comes as the Trump administration wages a trade war on China via tariffs and crackdowns on Chinese companies such as tech giant Huawei.
Today’s estimate “reflects downward revisions to nonresidential fixed investment and private inventory investment,” BEA said.
“Imports, which are a subtraction in the calculation of GDP, were revised up,” it said, although it added: “The general picture of economic growth remains the same.”
The US economy has remained strong in recent months despite a rise in trade tensions and global headwinds.
The Organisation for Economic Co-operation and Development (OECD) earlier this month predicted that the US economy would grow by 2.8 per cent in 2019, compared to growth in Britain of 1.2 per cent and in Germany of 0.7 per cent.
However, the impacts of the latest escalation of the US-China trade war – which saw US President Donald Trump ratchet up tariffs on $200bn worth of Chinese goods to 25 per cent from 10 per cent – could make themselves felt in the next round of official data.
Last week a widely-watched survey suggested trade tensions had helped push business activity growth in the US to a three-year low in May.
Output in manufacturing and services was held back by lower demand and subdued growth of new orders, which firms commonly attributed to global trade tensions, the survey from data company IHS Markit revealed.
Read more: US private sector output falls to three-year low as trade war bites
“There’s no doubt that the figures from the first quarter were strong,” said Nancy Curtin, chief investment officer at Close Brothers Asset Management. “Failure to strike a trade deal soon could see both consumer spending and investment hit, acting as a drag on global economic output,” she added.