U.S. economic growth accelerated more than expected in the second quarter and the decline in output in the prior period was less steep than previously reported, which could bolster views for a stronger performance in the last six months of the year. Gross domestic product expanded at a 4 percent annual rate as activity picked up broadly after shrinking at a revised 2.1 percent pace in the first quarter, the Commerce Department said on Wednesday. That pushed GDP above the economy's potential growth trend, which analysts put somewhere between a 2 percent and 2.5 percent pace. Economists polled by Reuters had forecast the economy growing at a 3 percent rate in the second quarter after a previously reported 2.9 percent contraction. The economy grew 0.9 percent in the first half of this year and growth for 2014 as a whole could average above 2 percent. The first quarter contraction, which was mostly weather-related, was the largest in five years. Employment growth, which has exceeded 200,000 jobs in each of the last five months, and strong readings on the factory and services sectors from the Institute for Supply Management underpin the bullish expectations for the rest of the year.
First published July 30 2014, 6:02 AM