June 7, 2018 / 4:20 PM / 4 months ago

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

WASHINGTON (Reuters) - U.S. economic growth for the first quarter is likely to be revised lower after the Census Bureau’s Quarterly Services Survey (QSS) report on Thursday showed a bit less spending on services than previously estimated.

FILE PHOTO: Cargo containers sit idle at the Port of Los Angeles as a back-log of over 30 container ships sit anchored outside the Port in Los Angeles, California, February 18, 2015. REUTERS/Bob Riha, Jr./File Photo

JPMorgan expects that first-quarter gross domestic product could be pared to a 2.0 percent annualized rate when the government publishes its third growth estimate later this month.

The Commerce Department reported last month that the economy grew at a 2.2 percent pace in the January-March period.

“We think that consumption related to nonprofit hospitals will be the main culprit behind our expected downward revision,” said Daniel Silver, an economist at JPMorgan in New York.

“The latest GDP report showed that nominal gross output of nonprofit hospitals increased (at a) 3.3 percent seasonally adjusted annual rate in the first quarter, but related data on revenue from the QSS point to a modest decline in consumption during the quarter.”

Nonprofit hospital spending accounts for nearly 4 percent of GDP. As result, growth in consumer spending could be revised lower. Consumer spending, which accounts for more than two-thirds of the U.S. economy, was reported to have expanded at a 1.0 percent rate the first quarter, the slowest in almost five years.

Reporting By Lucia Mutikani; Editing by Chizu Nomiyama

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