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US economic growth slower than forecast

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By Kristina Harazim  with Reuters
The US economy had a slower start to the year than forecast
The US economy had a slower start to the year than forecast

The US economy grew at an annual rate of 2.2 per cent, slightly less than the forecast 2.3 per cent.

The Commerce Department released the figures on Wednesday, and said exports, inventory investments and consumer spending were weaker than first reported.

The declines exacerbated the slowdown from the fourth quarter of 2017 when the GDP rose by 2.9 per cent.

The report showed consumer spending increased 1.0 per cent in the first quarter, rather than the forecast 1.1 per cent. It marked the weakest growth in almost five years.

Spending on home building fell 2.0 per cent.

Business investment on the other hand was higher than previously reported, driven by a more than 10% increase in spending on intellectual property.

The Commerce Department said a robust labour market and income tax cuts were likely to boost activity this year.

It said the tax cut, which reduced the corporate rate from 35% to 21%, was already having an impact.

Other data showed private employers maintaining a steady pace of hiring in May, and the goods trade deficit falling in April.

The reports added to solid April data on retail sales, business spending on equipment and industrial production.

Video editor • Kristina Harazim