US Records Second Quarter GDP Growth Of 2.3%

The recovery in US economic growth during the second quarter of the year missed expectations but a first quarter contraction in GDP was revised away in the latest official figures.

The Commerce Department said higher consumer spending drove an annualised GDP increase of 2.3% between April and June.

Economists had expected a figure nearer to 2.6% because of strong employment growth and a pick-up in wages - and US stocks reflected disappointment on Wall St opening.

However, the GDP estimate for the first three months of 2015, when the economy was badly hampered by winter storms, was revised sharply upwards from -0.2% to 0.6%.

The signs of a strengthening jobs market, higher wages and expectations of faster growth ahead help explain why the Federal Reserve appears on track to start raising interest rates this year.

On Wednesday, the Fed ended its latest policy meeting by keeping a key rate at a record low near zero, where it has remained since 2008.

Policymakers said they still needed to see further gains in the jobs market and feel reasonably confident that low inflation will move back to its 2% target rate.

Fed chair Janet Yellen has raised expectations of a rate hike by the end of the year - with some analysts saying the shift could come as early as September.

But there are other headwinds to consider ahead of any rate increase.

The strong dollar, which has damaged US exporters particularly, would be expected to strengthen further.

The Commerce Department reported that business investment was already a drag on growth.

A separate report on Thursday showed first-time applications for state unemployment benefits increased last week.