LONDON (ShareCast) - The US economy grew less than expected in the first quarter as a 5.4 per cent rise in imports offset a 2.9 per cent gain in exports, according to official figures out Friday.
The country's gross domestic product (GDP) climbed 2.5%, missing the 3.0% forecast, reflecting downfall in net trade which fell 0.5 percentage points (pp).
However, it jumped well above the 0.4% growth reported in the fourth quarter of last year. Private consumption provided a boost, up 3.2% which beat the 2.3% expected by analysts.
"While 2.5% growth represents a clear rebound from the 0.4% recorded in the fourth quarter the underlying picture is not one of a sustainable ramp up in demand growth, in our view," Barclays (LSE: BARC.L - news) said.
A 12.3% growth in household spending was partly countered by softer-than-expected residential and structures investment which fell 0.3%.
Barclays said it had anticipated a stronger gain in residential, given the strong upward trend in housing starts.
On the other hand, a 4.1% decline in government spending and a jump in inventory accumulation which added 1.0pp to GDP growth broadly met forecasts.
Barclays expects consumer spending growth to slow in the second quarter given the tax increases at the start of the year.
Household income accounts revealed a 5.3% decline in real disposable income in the first quarter, broadly in line expectations, given the drag from the expiration of the payroll tax cut and other tax increases.
"However, with significant fiscal tightening in the pipeline, we expect a modestly softer picture in the remainder of the year, sufficient to keep the majority of monetary policymakers happy to maintain the current stance of accommodation," Barclays added.
RD
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