US GDP: Trump hails pick-up in growth, but consumer spending slows - as it happened
Rolling coverage of the latest economic and financial news, including first-quarter growth figures from America
- Latest: Trump welcomes GDP figures
- America's economy grew by 3.2% (annualised) in last quarter
- Economists only expected 2.2% growth.
- Equivalent of 0.8% quarterly growth
- Inventory building and net trade boost growth
- But consumer spending growth weakens
5.24pm BST
And finally, here's our news story on the US GDP report:
Related: US economic growth stronger than expected despite weak demand
5.23pm BST
European stock markets have closed for the night, with small losses in London and gains elsewhere.
Investors seem to have shrugged at the US GDP report - understandable, given the weakness beneath the strong topline numbers.
5.22pm BST
President Trump has also shown his market-moving powers, by knocking the oil price down.
He performed this feat by telling reporters in Washington that he'd called the Organization of the Petroleum Exporting Countries and told them to get prices down.
"Gasoline prices are coming down. I called up OPEC, I said you've got to bring them down. You've got to bring them down,"
5.11pm BST
Here's a clip of Larry Kudlow explaining that today's GDP figure is a "blowout number".....and that interest rates may need to fall!
The U.S. economy is off to its best start to a year since 2015 and White House economic adviser Larry Kudlow believes it means the Federal Reserve should cut interest rates. https://t.co/kibcEikPwW pic.twitter.com/3HnNf6L8M4
5.06pm BST
Robin Anderson, Senior Global Economist at Principal Global Investors reckons Donald Trump is right - there's not enough inflationary pressure to justify an interest rate hike.
"The Fed has to be confident in its patient stance. The headline GDP print suggests that the U.S. economy is doing just fine, so there is no reason to cut rates.
But, before the Fed hikes next, they want to see inflation come back to life. Right now, inflation is nowhere to be found."
4.33pm BST
Bad news for the president - some economists predict US growth will decelerate in the coming quarters.
Here's Ronald Temple, Head of US Equity at Lazard Asset Management.
"While the headline US GDP number was much stronger than expected, the components that measure domestic demand were weak. Specifically, growth in real final sales to private domestic purchasers was only 1.3% versus 3.1% in 2018.
Looking beyond the first quarter, I continue to expect growth to decelerate from 2018, but still remain above 2% for the full year."
4.14pm BST
President Trump has cheered today's growth figures:
Just out: Real GDP for First Quarter grew 3.2% at an annual rate. This is far above expectations or projections. Importantly, inflation VERY LOW. MAKE AMERICA GREAT AGAIN!
3.43pm BST
Shares have dipped slightly on the New York stock exchange, as traders digest the GDP numbers.
The Dow Jones industrial average is down 20 points, or 0.07%, while the tech-focused Nasdaq has lost 0.3%.
"US GDP smashed the forecast of 2% growth, having come in at 3.2% for the first quarter of the year.
However, the market reaction was muted due to a surprise drop in personal consumption expenditure (PCE) measuring inflation in goods and services.
3.41pm BST
Leading Republican Newt Gingrich is hailing the "Trump effect" - again, ignoring that the detail of today's growth report isn't as strong as the top line.
The report the American economy grew by 3.2% in first quarter is further proof of the Trump Effect on our economy.Despite the negative media and the destructive congressional Democrats President Trump is implementing a pro jobs, pro income increase,pro growth policy that works.
2.58pm BST
Donald Trump's political allies are cheering today's GDP report (and not digging into the problems economists have spotted).
ai "Beautiful"
ai "Strong"
ai "Extraordinary"
ai "Incredible"
That's the Trump effect. 3.2% GDP for the first quarter, and no sign of slowing down. https://t.co/tj5Sm4LwGT
2.49pm BST
Donald Trump's top economic adviser Larry Kudlow is discussing the growth report on CNBC now.
He says the 3.2% growth rate is strong, and a positive sign of Trump's handling of the economy.
First White House reaction to GDP report: Kudlow: It's a blowout number; It's extremely positive; The inflation rate continues to slip lower and lower; Could be a rate cut on the way --CNBC
Larry Kudlow is calling for a rate cut on @CNBC after GDP growth picked up to 3,2% in Q1. This will be a fun summer for the #FederalReserve
2.40pm BST
Currency analyst Marc-Andri(C) Fongern, though, argues that America's economy is too strong to justify interest rate cuts.
The details are telling us GDP data is mixed. Ok, but the U.S. just expanded 3.2% while the rest of the world, especially Europe is fragile.
The US dollar is still the pole position starter...Please, end the talk of rate cuts.
Strong job market, strong GDP growth compared to Europe (Germany)...Of course there is something on the horizon which suggests that Q2 GDP isn't going to be as good as Q1, but the elimination of rate cut talks is a bullish factor for the USD in an unsteady G10 world. https://t.co/l2wWV4MBtL
2.27pm BST
Jason Furman, who chaired President Obama's Council of Economic Advisers, also urges caution about the growth figures:
First quarter GDP is 3.2% but the underlying data is much weaker and is consistent with a slowing economy.
GDP is volatile so this is weak signal. But to the degree today's data has any info it is that the underlying trend of consumption and investment is weakening. And no reason to believe we'll get lucky again next quarter with inventories, NX, and govt.
2.21pm BST
Paul Ashworth of Capital Economics isn't impressed with the blowout US growth report.
He argues that the underlying picture is weaker than the 3.2% headline growth figure suggests, once you strip out certain elements:
Taking out the over-sized boosts from net trade, inventories and highways investment, which will all be reversed in the coming quarters, growth was only around 1.0%.
Under those circumstances, we continue to expect that overall growth will slow this year, forcing the Fed to begin cutting interest rates before year-end.
2.11pm BST
The bottom line is that today's US growth report appears better than expected, but there are some concerns under the surface - mainly due to falling consumer spending, and the inventory build-up already discussed.
Here are the key points:
In reading this Q1 #GDP report, be careful: final sales were up more modest 2.5% (saar) w/ inventory accumulation adding 0.65pp. Risk is Q2 inventory drag.
Overall, GDP momentum +3.2% y/y in Q1 -- faster than 3% y/y in Q4, but consumer, business, residential spend cooling pic.twitter.com/marznhhN7U
1.59pm BST
The New York Times's Ben Casselman has dug into the GDP report, to show how US consumer demand is slowing (even as the headline growth rate picks up)
In fact, this was the weakest performance for final private demand since 2013. pic.twitter.com/BCOIJfZWmF
1.58pm BST
A fall in imports has also boosted US growth - perhaps a sign that the Trump trade war is dampening demand for overseas goods.
Here's an excellent chart showing how net trade boosted US GDP:
Chart for the UK audience. US GDP growth of 0.8%q/q in Q1 2019, with half of the contribution to growth coming from inventories & net trade (predominantly via falling imports). Household consumption contributed 0.2% & private investment 0.1%. pic.twitter.com/qd6tjcTSv7
1.55pm BST
Some of the initial excitement is fading, as analysts dig into the US growth report.
The headline number is certainly stronger than expected....but there's concern that inventory-building contributed to growth.
Fab Q1 GDP print (3.2pc)...till you look under the hood and kick the tires. Inventory buildup will have to be unwound (which will drag on growth), imports were weak (everyone front ran the tariffs last year) and defence spending was strong (but rest of govt spending weak).
1.46pm BST
Wall Street is cheering these growth figures, as investors and analysts reassess the state of the US economy.
Futures pop after Q1 GDP reading blows past estimates https://t.co/tRW2nyzvBX pic.twitter.com/OtXHNtuIbF
Q1 #GDP much better than expected. What happened to "residual seasonality" and more importantly the negative effects of the government shutdown and US-China #tradewar? Could GDP have been over 4% if these factors were at play? https://t.co/ZhiS34Z7Az
1.44pm BST
America's habit of using annualised growth rates can be confusing for the rest of us.
But a 3.2% annualised growth rate simply means the US grew by 0.8% in the first quarter.
Good news for the US! "Real gross domestic product (GDP) increased at an annual rate of 3.2 percent in the first quarter of 2019" Or as we would put it GDP rose by 0.8% in the quarter putting the US in the front rank right now.
A 3.2-percent first quarter GDP print shows that the United States remains the cleanest, meanest...dirty shirt in the global economy - slowing, but not as much as its major counterparts. The dollar's rally remains confoundingly intact.
1.39pm BST
More key points from the US GDP report:
US Q'1'19 GDP: Top line up 3.2%, real final sales 2.5%, final sales to domestic purchasers 1.4% final sales to private domestic purchasers 1.3%. Driven by massive increase of $128.4 billion in inventories which is not sustainable. Trade deficit narrowed.
#GDP imports fall sharply in quarter, drop adds 0.58 pp to GDP growth
1.38pm BST
America's growth in the last quarter was driven by a pick-up in trade, and a swelling in company inventories.
The Commerce Department also reports that government investment also rise, which also helped to push growth up to an annual rate of 3.2%.
Trade & inventories help Q1 real #GDP to top forecasts at 3.2%
1.34pm BST
Oh you beauty. US 1Q #GDP up 3.2% annualized. Above the top end of a very wide range of forecasts.
1.32pm BST
NEWSFLASH: America's economic growth accelerated sharply in the first quarter of this year.
GDP expanded at an annual rate of 3.2% in January-March -- up from an annual rate of 2.2% in the final three months of 2018.
1.17pm BST
Just in: Oil giant Exxon has missed Wall Street expectations.
The company has reported net income of $2.35bn, or 55 cents a share, for the last quarter -- sharply down on $4.650bn, or $1.09 a share, a year ago.
US Opening Calls:#DOW 26395 -0.26%#SPX 2921 -0.19%#NASDAQ 7787 -0.36%#IGOpeningCall
1.00pm BST
Investors on both sides of the Atlantic, and beyond, are itching to discover how well, or badly, the US economy performed in the last quarter.
Focus on U.S. GDP (Q1). We are looking for pretty decent data around 2.2% which should bolster our bullish USD view. Signs of avoiding a bigger slowdown are welcomed near / medium term. #USD $DXY #FX
12.58pm BST
The 22 Debenhams store closures announced this morning put 1,200 jobs at risk.
But the full total will be even higher, as the firm is aiming to shut 50 stores! Here's the latest news:
Related: Debenhams store closures put at least 1,200 jobs at risk
12.13pm BST
Andy Bruce of Reuters has captured the latest signs of Brexit stockpiling (as discussed here)
ANOTHER STOCKPILING RECORD
UK factories stockpiled in early 2019 at the fastest pace since records began in the 1950s, according to today's CBI Industrial Trends Survey. Chimes with the PMIs. pic.twitter.com/8fNGjUV6n9
12.01pm BST
As the lunchtime gong rings across the City, the markets remain subdued ahead of the US GDP report.
The FTSE 100 is lagging behind the rest of Europe, down 14 points (0.2%). Royal Bank of Scotland (-4.5%), Glencore (-3.3%) and Just Eat (-3.2%) are the top fallers, for reasons already discussed....
11.56am BST
Back in the markets, mining giant Glencore is under pressure after revealing it is under investigation over potential 'corrupt practices'.
It's not clear exactly what America's Commodity Futures Trading Commission suspects Glencore of doing, beyond violating parts of the Commodity Exchange Act.
11.27am BST
Here's Howard Archer of the EY Item Club on the surprise pick-up in UK mortgage lending last month:
11.18am BST
UK warehouses are groaning after factory bosses stockpiled at a record rate in the last three months.
So says the CBI, whose latest survey of UK industry shows that Brexit uncertainty has had a big impact this year.
The three months to April saw an unprecedented acceleration in the growth of stocks held by the manufacturing sector....
Stocks of raw materials (+39%), work in progress (+21%), and finished goods (+25%) all grew at their fastest respective paces on record (since 1958 for raw materials and finished goods, and since 1977 for work in progress).
10.53am BST
Ride-hailing company Uber has its critics (from workers who demand proper benefits to authorities who fear it is increasing congestion).
But you can't accuse it of lacking ambition; the firm is now aiming to be the biggest tech flotation since Facebook.....
Related: Uber aims for stock market debut value of up to $90bn
10.32am BST
Getting back to Royal Bank of Scotland's latest results.... Russ Mould of AJ Bell reckons investors are disappointed that its net interest margin has fallen again.
This is effectively the difference between the profit RBS makes on its loans, and the interest it pays to its own lenders (ie people who trust it with their savings).
RBS is getting help here from central bank policies as low interest rates and Quantitative Easing keep borrowing costs low for consumers and corporations and make it easier for them to services their debts. But just as ZIRP (zero interest rate policies) and QE give with one hand, they are taking away with another, because the flat yield curve means banks are finding it hard to make a margin when they borrow money in the short-term and lend it out over the long term.
"RBS' net interest margin fell again and this weighed on profits once more. Nor does this situation look likely to change, given competition and central banks' policy U-turn this year, with a slew of monetary authorities seemingly putting interest rate increases on hold until at least 2020, including the Bank of England.
10.10am BST
Newsflash: stricken retail chain Debenhams has revealed the first 22 stores which will close following its plunge into administration.
Related: Debenhams to close 22 stores: full list
10.05am BST
Some snap reaction to the rise in UK mortgage approvals:
UK Finance reports 42k mortgage approvals for house purchase in March, up 9%y/y, though UKF notes Mar-18 was a weak month. Comes off the back of HMRC reporting UK transactions up 0.4%y/y in March & the various house price indices between 1%y/y & -1%y/y. Still just bumping along. pic.twitter.com/6mPav19Nuf
UK new mortgage approvals / RICS new buyers via @PantheonMacro
One word: Yikes. pic.twitter.com/Iyil8Pv26Q
9.41am BST
Newsflash: The number of new mortgages approved in the UK has hit a nine-month high.
UK Finance, which represents British lenders, reports that 39,980 loans for house purchases were approved in March.
#UnitedKingdom UK Finance Mortgage Approvals at 39.980K https://t.co/8XGCSGaZNz pic.twitter.com/8ooBETDHPm
9.26am BST
Disappointing factory output data from Japan overnight is fuelling concerns over the global economy.
Industrial production fell by 4.6% year-on-year in March, the steepest decline since May 2015 (and the second monthly fall in a row).
Japan Industrial production -4.6 YoY (expected -3.8%) fastest drop since May 2015. MoM -0.9% (expected 0.00%)
Another bad news for Asia Export and domestic economies pic.twitter.com/a2avoZcgHE
Japan's stocks look pressured by a weaker USD and some poor data where industrial production dropped at the fastest pace since 2015.
9.14am BST
Daimler isn't the only carmaker struggling right now -- Volvo and PSA have also posted falling profits in the last quarter.
Daimler has reported a slump in first quarter earnings, as the German company joins other global carmakers plagued by falling sales in China and flat markets in the Europe and the US.
The Stuttgart-based parent of Mercedes-Benz said earnings before interest and tax fell 16 per cent to a2.8bn from a3.3bn a year earlier. The result was ahead of an analyst forecast, provided by Refinitiv, of a2.6bn.
8.51am BST
RBS and Just Eat have helped to pull the FTSE 100 down this morning.
The blue-chip index has shed 18 points, or 0.25%, in a fairly subdued session so far.
8.43am BST
Online takeaway firm Just Eat is also propping up the FTSE fallers this morning, after reporting slower growth in the UK.
8.31am BST
Shares in Royal Bank of Scotland have fallen over 5% at the start of trading, after warning that Brexit uncertainty is hurting demand.
Despite beating forecasts this morning with profits of 707m in the last quarter (down from 808m) RBS is the worst-performing FTSE 100 stock, down 11.3p at 238.5p.
While we retain the outlook guidance we provided in the 2018 Annual Results document, we recognise that the ongoing impact of Brexit uncertainty on the economy, and associated delay in business borrowing decisions, is likely to make income growth more challenging in the near term.
RBS first-quarter income falls less than expected Bank says Brexit uncertainty will weigh on revenue in coming months
8.12am BST
German carmaker Daimler has joined the ranks of auto firms suffering from weak demand in China, and a lacklustre global economy.
"Achieving the financial targets for 2019 has not become easier since the first quarter.
"We now have to work hard to achieve our targets for 2019.
8.01am BST
Good morning and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Related: Microsoft becomes third listed US firm to be valued at $1tn
Related: Amazon makes $1bn a month as growth slows
RBS earnings: 707 million for Q1 net profit, vs 792 million last year https://t.co/rwX57UIKFW
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