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U.S. Economy Grew 4.1% in Second Quarter

Gross domestic product (GDP) in the U.S. increased at an annual rate of 4.1% in the second quarter of 2018, according to the Department of Commerce. In the first quarter, the GDP increased 2.2%.

The increase in real GDP in the second quarter reflected positive contributions from personal consumption expenditures, exports, nonresidential fixed investment, federal government spending and state/local government spending that were partly offset by negative contributions from private inventory investment and residential fixed investment. 


New Orders for Durable Goods Up 1.0%

New orders for manufactured durable goods in June increased $2.5B or 1.0% to $251.9B, the U.S. Department of Commerce announced on Thursday. This increase, up following two consecutive monthly decreases, followed a 0.3% May decrease. Excluding transportation, new orders increased 0.4%. Excluding defense, new orders increased 1.5%. 

IHS Markit Index Shows Growth, Concerns Over Trade

At 55.5 in July, the seasonally adjusted IHS Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) was little-changed since June (55.4) and well above the average since this index began in May 2007 (52.6). A relatively strong improvement in manufacturing business conditions reflected robust new order growth, alongside a solid upturn in both production volumes and employment numbers.

The overall improvement in manufacturing performance was underpinned by solid growth in domestic demand, which helped to offset another slight fall in export sales. Although only marginal, the latest drop in new work from abroad was the greatest seen since May 2016. There were also widespread reports that tariffs on steel and aluminum had pushed up input costs in July. 

Leading Economic Indicators Point to Continuing Growth

The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.5% in June to 109.8 (2016 = 100), following no change in May, and a 0.4% increase in April.

“The U.S. LEI increased in June, pointing to continuing solid growth in the U.S. economy,” said Ataman Ozyildirim, director of business cycles and growth research at The Conference Board. “The widespread growth in leading indicators, with the exception of housing permits which declined once again, does not suggest any considerable growth slowdown in the short-term.” 

Beige Book: Manufacturers Concerned Over Trade

According to the Federal Reserve Beige Book, economic activity continued to expand across the U.S. with 10 of the 12 Federal Reserve Districts reporting moderate or modest growth. The outliers were the Dallas District, which reported strong growth driven in part by the energy sector, and the St. Louis District where growth was described as slight. Manufacturers in all districts expressed concern about tariffs and many districts reported higher prices and supply disruptions that they attributed to the new trade policies. 

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