Growth for the nation’s economy picked up dramatically in the second quarter of the year with the gross domestic product increasing at an annual rate of 2.5%.
This compares to an annual rate of 1.1% during the first quarter of the year. This third and final reading from the U.S. Commerce Department is unrevised from the second report.
Consumer spending, the largest component of the GDP, which is a measure of the nation’s total output of goods and services, increased at an unrevised 1.8% annual rate in the second quarter.
“Looking ahead to the third quarter, amid an uneven labor market, directionless manufacturing growth and tepid overseas demand, there appears to be little catalyst to push the economy beyond the 2% growth range,” said Sterne Agee chief economist, Lindsey Piegza.
This follows two reports released on Wednesday showing a slight increase in orders for durable goods while new home sales surged.
New orders for manufactured durable goods in August increased 0.1%, according to the U.S. Commerce Department. The hike, up four out of the last five months, follows a revised 8.1% decline in July. New orders for transportation equipment lead the increase, picking up 0.7%. When transportation is removed from the overall figure, there was a 0.1% decline.
Shipments of manufactured durable goods increased in August 0.9%, follows two straight monthly declines, hitting its highest level on record going back to 1992. Like new orders, transportation led shipments of manufactured durable goods, increasing 1.5%.
Meantime, a third report, also from the Commerce Department, shows new homes in the U.S. increased 7.9% in August to a rate of 421,000 annually with May through July sales revised downward. The July drop was 14.1%
“Sales of newly constructed homes rose significantly in August after plunging in July,” said, Piegza. “And while the monthly increase was not enough to eradicate the activity lost the month prior, it was a welcomed rebound.
She said the longer term sales trend remains under pressure as the threat of rising financing costs led to a surge in activity, pulling months of demand forward into the first half of the year.
“Going forward, a further backup in rates will unlikely pull the rug out from under the housing recovery but instead cause activity to cool, reflecting the slower pace of recovery seen in 2011 and 2012,” said Piegza. “Of course, the Fed’s most recent decision to leave monthly asset purchases unchanged, coupled with a loss of acceleration in the underlying fundamentals of the economy is likely to keep downward pressure on mortgage rates, at least for now.”