Economic growth unexpectedly picked up in the second quarter of the year, expanding at a still-sluggish 1.7 percent annual rate, the Commerce Department said Wednesday. Growth remains sluggish.
The figure was a significant improvement over the 1.1 percent growth rate in the first quarter, which was revised down Wednesday from an earlier 1.8 percent estimate.
Analysts had expected economic growth to have slowed down in the second quarter, with economists surveyed by Bloomberg News projecting just 1 percent growth.
Although the initial read on the pace of economic expansion from April through June far exceeded those estimates, it remained weak in the face of tax increases and federal spending cuts that kicked in this year.
Consumer spending took a hit in the second quarter, increasing 1.8 percent after rising 2.3 percent in the first quarter, the Commerce Department said.
“Economic growth remained slow in the second quarter as consumer spending cooled and cuts in federal government spending weighed on economic activity,” said Kathy Bostjancic, director for macroeconomic analysis at the Conference Board.
In a separate report, a private survey shows U.S. businesses created a healthy 200,000 jobs this month, although analysts caution that recent growth has come disproportionately in lower-paying businesses such as retailers, hotels and restaurants.
The payroll company ADP said Wednesday that companies hired in July at the fastest pace since December. And it revised up its estimate of the number of jobs the private sector created in June from 188,000 to 198,000.
Professional and businesses services companies added 49,000 jobs this month, construction companies 22,000. But manufacturers shed 5,000.
Small businesses – those with fewer than 50 employees – added 82,000 jobs.
“Job growth is consistently good – solid across industries,” said Mark Zandi, chief economist with Moody’s Analytics, which compiled the jobs report for ADP.