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| Version 1 | Version 2 |
|---|---|
| US grows by 0.6% in first quarter | US grows by 0.6% in first quarter |
| (10 minutes later) | |
| The US economy grew by 0.6% in the first quarter of 2008, a slightly stronger pace than expected | The US economy grew by 0.6% in the first quarter of 2008, a slightly stronger pace than expected |
| The first quarter figure from the US Commerce Department exceeded analyst expectations of a 0.2% growth and eased fears of a slowdown. | The first quarter figure from the US Commerce Department exceeded analyst expectations of a 0.2% growth and eased fears of a slowdown. |
| But consumer spending, a key driver of the American economy, rose just 1% in the first quarter. | |
| The US central bank is widely expected to announce a cut in interest rates to 2% from 2.25% later on Wednesday. | The US central bank is widely expected to announce a cut in interest rates to 2% from 2.25% later on Wednesday. |
| Shares traded higher on the Commerce Department report as fears of a sharp slowdown subsided. | Shares traded higher on the Commerce Department report as fears of a sharp slowdown subsided. |
| Consumer weakness | Consumer weakness |
| Yet consumer spending, which accounts for two thirds of economic activity, grew at the weakest rate since the second quarter of 2001. | Yet consumer spending, which accounts for two thirds of economic activity, grew at the weakest rate since the second quarter of 2001. |
| It rose 1% after growing 2.3% in the fourth quarter. | It rose 1% after growing 2.3% in the fourth quarter. |
| "The outlook on the consumer side is still cloudy. There isno assurance that consumer spending is even steady," said Pierre Ellis, senior global economist at Decision Economics. | |
| Spending on residential construction fell 26.7%, indicating the extent of the slowdown in the American housing sector. | Spending on residential construction fell 26.7%, indicating the extent of the slowdown in the American housing sector. |
| High inventories also masked the true picture, other analysts said. | |
| Added Stephen Malyon, senior currency strategist at Scotia Capital: "A little bit strong than market expectations but the strength is slightly misleading as inventories has accounted for 0.8% of the rise. Final domestic demand actually fell 0.4% underscoring the deterioration in the U.S.economy. " | |
| Analysts say the central bank is still likely to announce a rate cut later. | |
| In the last quarter of 2007, growth slowed sharply to an annual rate of just 0.6%. |