Overall, the US economy appears to be continuing to grow at a modest pace. While indicators suggest that GDP growth will slow in the June quarter from its March quarter level, this will partly reflect a temporary inventory correction. The underlying pace of growth is still expected to strengthen later in the year.
We have revised down our forecasts for June quarter GDP from 0.5% qoq to 0.3% qoq (or 1.1% on an annualised basis). This reflects a combination of factors including downward revisions to past consumption data by the BEA, weak non-residential construction and trade outcomes for May, and weak inventory data.
Inventory movements tend to have little impact over time on GDP growth. The ‘final sales of domestic product’ measure excludes inventories and can give a better underlying picture of demand for U.S. goods and services. On this basis, the June quarter is expected to be similar to the March quarter (perhaps a bit stronger)
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