The U.S. economy surged in the second quarter of the year, bouncing back from its worst performance in five years, according to new U.S. Commerce Department figures.
The gross domestic product, which measures the total output of goods and services, expanded at an annual rate of 4%, more than many economists were expecting.
This follows it shrinking at a revised 2.1% annual rate in the first quarter, less that the previously reported 2.9% rate, following an unusually harsh winter.
This is the first of three second quarter estimates, with the second, based on more complete data, due out in late August.
The department also revised figures for the final quarter of 2013, showing the economy grew at 3.5% annual rate, compared to an earlier reported 2.6% pace.
“The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures, private inventory investment, exports, nonresidential fixed investment, state and local government spending, and residential fixed investment,” the Commerce Department said. “Imports, which are a subtraction in the calculation of GDP, increased.”
The report also said personal income increased $208 billion in the second quarter, compared with an increase of $176.6 billion in the first. The acceleration in personal income primarily reflected an upturn in personal dividend income and a smaller decrease in farm proprietors' income that were partly offset by a deceleration in wages and salaries, according to the department.
Consumer spending in the second quarter, which accounts for about two-thirds of all U.S. economic activity, more than doubled in the second quarter compared to the first, gaining 2.5%, while business investment surged 7% following a 1% decline in the first quarter.
Meantime, a second report offers a preview into official employment numbers set to be released by Uncle Sam on Friday.
Private sector employment increased by 218,000 jobs from June to July according to the ADP National Employment Report.
Goods-producing employment rose by 16,000 jobs in July, down from 43,000 jobs gained in June. The construction industry added 12,000 jobs over the month, less than half last month’s gain.
"Although down from June, the July jobs number marks the fourth straight month of employment gains above 200,000,” said Carlos Rodriguez, president and chief executive officer of ADP.
Service-providing employment rose by 202,000 jobs in July, down from 238,000 in June. The professional/ business services contributed 61,000 jobs in July, down from 79,000 in June. Expansion in trade/transportation/utilities grew by 52,000, down slightly from June’s 56,000. The 9,000 new jobs added in financial activities was down 25% from last month’s number.
"The July employment gain was softer than June, but remains consistent with a steadily improving job market,” said Mark Zandi, chief economist of Moody’s Analytics. “At the current pace of job growth unemployment will quickly decline. Layoffs are still receding and hiring and job openings are picking up. If current trends continue, the economy will return to full employment by late 2016.”
Payroll growth for businesses with 49 or fewer employees increased by 84,000 jobs in July. That’s down from 126,000 in June. Job growth was also down over the month for medium-sized and large firms. Employment among medium-sized companies with 50 to 499 employees rose by 92,000, down from 112,000 in June. Employment at large companies, those with 500 or more employees, increased by 41,000, down slightly from the previous month. Companies with 500-999 employees added 14,000, on par with June’s 15,000.
The report is derived from payroll processor ADP and its actual payroll data, which measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.