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U.S. services data suggests upward revision to first-quarter GDP
June 8, 2017 / 4:29 PM / 3 months ago

U.S. services data suggests upward revision to first-quarter GDP

A waitress waits for plates in the kitchen of a restaurant in Bayou La Batre, Alabama November 10, 2009. REUTERS/Carlos Barria

WASHINGTON (Reuters) - The U.S. economy was probably not as weak in the first quarter as has been reported, with data on Thursday showing modestly stronger consumer spending than previously estimated.

The Commerce Department’s quarterly services survey, or QSS, showed consumption, including healthcare spending, increased at a faster clip than the government had assumed in its second estimate of gross domestic product published last month.

Economists said the data suggested first-quarter consumer spending could be lifted by as much as eight-tenths of a percentage point to a 1.4 percent annual rate when the government publishes its third GDP estimate on June 29.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was reported last month to have grown at the start of the year at its slowest pace since the fourth quarter of 2009.

“This revision should be partially related to health care consumption, but other spending categories will likely play a role as well,” said Daniel Silver, an economist at JPMorgan in New York.

The QSS data suggested first-quarter GDP could be revised up to as high as a 1.5 percent annualized rate from the 1.2 percent growth pace reported in May, according to economists.

Forecasting firm Macroeconomic Advisers said the solid services revenues implied stronger momentum for consumer spending heading into the second quarter.

“As a result, we raised our tracking forecast of second-quarter GDP growth by one-tenth to 3.0 percent,” Macroeconomic Advisers said.

Economists saw little impact on the first-quarter estimates for intellectual property products from the QSS data.

Reporting By Lucia Mutikani; Editing by Dan Grebler

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