US economic growth slows sharply to 1.5% - as it happened

American GDP growth weakened this summer despite solid consumer spending, as firms cut back on their inventories

3.16pm GMT

If you're just tuning in, here's what you need to know about the slowing US economy:

US economic growth braked sharply in the third quarter as businesses cut back on restocking warehouses to work off an inventory glut, but solid domestic demand could encourage the Federal Reserve to raise interest rates in December.

Gross domestic product increased at a 1.5% annual rate after expanding at a 3.9% clip in the second quarter, the Commerce Department said on Thursday. The inventory drag, however, is likely to be temporary and economists expect growth to pick up in the fourth quarter given strong domestic fundamentals.

Related: US economic growth slows in third quarter as businesses cut back

3.08pm GMT

This GDP report doesn't resolve the confusion over when US interest rates will rise.

Although growth slowed, the economy doesn't look weak enough to rule out a hike this year.

Forward-looking surveys have been signalling a slowdown, the strong dollar is hitting corporate profits, business investment is growing at only just over 2%, and inflationary pressure eased in the third quarter.

The US central bank would have known what the growth figures were before it met this week. It clearly wants to leave all options open, not least even though a move before the end of the year would probably require a big jump in non-farm payrolls - the key measure of the health of the labour market - in the next couple of months.

Related: US interest rates: slowdown in growth is no indicator of pre-Christmas rise

2.56pm GMT

Today's growth figures look better if you ignore the fact that US companies reduced their spending on inventory-building.

Capital Economics explains:

The slowdown in GDP growth to 1.5% annualised in the third quarter, from a very strong 3.9% in the second, was mainly due to a big drag from inventories, which subtracted 1.4% points after making a neutral contribution in the previous quarter.

The growth rate of final sales to domestic purchasers, a better gauge of underlying demand that strips out inventories and net external demand, was still as high as 2.9% in the third quarter.

2.45pm GMT

Alasdair Cavalla, economist at the Centre for Economics and Business Research, believes the Federal Reserve won't be deterred from hiking rates in December by today's report.

This is a disappointing result for the world's largest economy, but not disastrous. The rate was expected to fall given evidence from reduced hiring activity compared to earlier in the year, while leading indicators corroborated the slowdown....

Yesterday the Federal Reserve revised its guidance. It was interpreted to mean a rate rise in December, barring disastrous domestic performance before then, regardless of what happens in the global economy. (The last proviso had been in doubt.) Today's slowdown was as expected - something the Fed would have no doubt known yesterday. We maintain our expectation of a December rate rise.

2.43pm GMT

A reminder that this recovery is historically rather weak:

US Real GDP growth during the current expansion: 2.2%. Slowest growth recovery in history. pic.twitter.com/bgygrU1Tbz

US Nominal GDP Growth (YoY) falls to 2.9%. In the past, nominal growth has never been this low outside of recession. pic.twitter.com/q5Rj3YvM9A

1.57pm GMT

It's quite possible that US growth will bounce back this autumn.

Sky News reckons the slowdown between July and September is a temporary affair:

The slowdown was blamed on businesses in the manufacturing, wholesale and retail sectors reducing unwanted stockpiles or deciding not to restock heavily, taking 1.4 percentage points from the third quarter's growth.

However, economists expect that to be a blip - with GDP growth picking up in the current fourth quarter given the looming holiday season, low inflation and stronger wage growth and hiring.

US Econony Endures Sharp Summer Slowdown https://t.co/YXqGSybRpu pic.twitter.com/uw9ejSVQqb

1.50pm GMT

Shares are dipping at the start of trading in New York, as investors ponder the health of the US economy.

The Dow Jones industrial average has dropped 35 points, or 0.2%, to 17,743 after the opening bell - which was rung by a musical star:

The amazing James Monroe Iglehart (Genie in Broadway's "Aladdin") rings the @NYSE bell today $DIS pic.twitter.com/KNgQZkExui

1.35pm GMT

James Knightley of ING says the detail of today's report isn't all bad:

Inventories was a huge drag, subtracting 1.44 percentage points from growth. Investment in non-residential structures was down 4%, but everything else grew and net exports didn't really take anything away either.

1.33pm GMT

Here's Chris Williamson of Markit on today's growth figures:

"In particular, third quarter GDP was dragged down by a far smaller accumulation of inventories than in the second quarter, which is estimated to have reduced growth by 1.4%. This could therefore reverse in the fourth quarter as stock levels are rebuilt.

"The composition of growth was also noteworthy from a policy perspective. As expected, exports acted as drag on growth, reflecting sluggish demand in overseas markets and the dollar's appreciation, as did the energy sector, which is slashing capacity due to falling prices. But, importantly, consumer spending remained robust, with growth of expenditure merely easing from 3.6% in the second quarter to 3.2% and hinting at only a modest slowing of demand in the domestic economy.

1.20pm GMT

Here's a breakdown of the key points in the US GDP report:

1.13pm GMT

The US economy has now grown for six quarters in a row, since suffering a shock contraction during the bad winter of early 2014.

Economic Growth in US cools as companies rein in inventories. US Q3 misses: 1.5% vs 1.6% exp https://t.co/jM7BcZP1eB pic.twitter.com/HocRg7cyQ1

1.06pm GMT

The Financial Times have helpfully drawn a barchart showing US annualised growth over the last 14 quarters (from their news story, here)

12.58pm GMT

We've also got data showing that consumer inflation in the US fell during the last quarter.

The personal consumption expenditure (PCE) fell to 1.2%, down from 2.1% in the second quarter.

#GDP: Meh, tending to yuck. Consumers consuming sorta respectably. PCE Price index falls more to 1.2%. In normal times #Fed w/be cutting now

12.52pm GMT

Bloomberg's Carl Riccadonna reckons this growth report suggests US interest rates should remain at their current record low:

Overall, GDP growth slipped from 2.7% to 2.0%--this will not give the Fed confidence that time is right for liftoff.

12.48pm GMT

This excellent spreadsheet shows which parts of the US economy grew in the last quarter (in green) and which shrank (in red):

Contributions to Percent Change in Real GDP: pic.twitter.com/CvGztxe6CW

12.45pm GMT

The US has grown by an average of 2% so far this year -- is that really enough to justify a rate hike in December?

#US GDP at 1.5% in Q3 leaving average quarterly growth so far this year at a rather modest 2% - we are at or a even a little below trend

If you're counting, GDP growth has averaged 2 percent through first three quarters of 2015. Another solid year, not a breakout year.

12.41pm GMT

Today's GDP report shows that US consumers drove growth in the last three months.

Household spending grew 3.2% in the quarter, suggesting the domestic economy remains strong.

12.37pm GMT

This US slowdown means that Britain is growing faster than America, at least over the last three months.

UK GDP rose by 0.5% in the third quarter, which equates to an annualised rate of 2%.

12.36pm GMT

This growth reading is broadly in line with forecasts:

GDP forecasts were quite accurate, it turns out. No big surprises here.

12.31pm GMT

Here we go! The US economy has slowed sharply in the third quarter of this year.

GDP rose by an annualised rate of just 1.5% during Q3, according to data JUST released by the Commerce department. That's a serious slowdown on the 3.9% recorded in the second quarter.

12.25pm GMT

Coming up at the bottom of the hour, the Q3 Advance US GDP report will be released. Traders expect a 1.6% annualized rate of growth.

12.19pm GMT

Just 10 minutes to go until we learn how the US economy fared in the last three months.

Remember: Wall Street expect a sharp slowdown, from an annual rate of 3.9% in Q2 to around 1.6% in Q3.

12.00pm GMT

The UK has made significant progress in creating gender diversity in the UK, but more needs to be done to get the City closer to parity.

As flagged up early this morning, Lord Mervyn Davies has called for women to hold at least 33% of all board positions by the end of this decade.

There is no evidence to warrant an about turn, but plenty of evidence to show the voluntary regime is working, as each and every month the percentage of women on FTSE boards increases."

Related: A third of boardroom positions should be held by women, UK firms told

Impressive progress with women on boards. Comments on @FT article show there is still some way to go @30percentclub pic.twitter.com/eFTrWleZmK

11.26am GMT

Back in the UK, the latest snapshot of retail sales has come in weaker than expected, raises further questions about the strength of the wider economy.

"Growth in sales and orders for high street retailers remains resilient, but there has been a slight slowdown in the pace of that growth following a strong September.

"Internet sales are starting to ramp up again as we head towards Christmas and we would expect them to continue this positive pattern until the end of the year.

11.15am GMT

City veteran George Magnus makes a typically astute point:

Too late. Countries w/o state interference in fertility had lower birth rates. It's called getting richer https://t.co/5ljCTEVnxh

Party: we'll leave the one-child policy to the property market instead.

11.14am GMT

We should remember that China's one-child-per-family policy had already begun to be relaxed before today's news.

In 2013, Beijing said couples could have two children if one of them was an only child (fairly likely, given the old policy)

You could have a second child if you or your partner were yourself an only child. That alongside the fact it was already possible to buy yourself an exception and it didn't count if you were a rural family whose first child was a girl meant there were quite a few loopholes. And in 2007, via JPM, a family-planning official in China estimated the one-child policy applied to less than 40% of the population. .

Better hope this attempt goes better than that 2013 attempt to shake things up. As Cap Econ said of that move, "Partial easing of the policy in late 2013 - the government allowed couples to have a second child if one of the parents is an only child - didn't increase the birth rate by as much as the government had anticipated.

My man @DavidKeo has the definitive piece on China's latest tweak to the rules on number of children allowed https://t.co/jzxsxRubch

11.04am GMT

The New Zealand dollar is also getting a boost; its dairy industry could benefit from faster population growth in China.

New Zealand Dollar flies as #China drops one-child policy. pic.twitter.com/ZpK5ktWSoe

10.48am GMT

Shares in French consumer giant Danone have jumped by 2% after news broke that China is ending its one-child-per-family policy.

Danone is a major producer of baby food and formula, so should benefit quite quickly from the change.

10.44am GMT

Big news breaking in China... Beijing is abolishing the one-child per family policy as part of its attempts to boost growth.

That's according to the official newswire, Xinhua, which is reporting that all couples will be allowed two children.

Xinhua: China is targeting "medium-high" eco growth for 2016-2020. Clarida on @bsurveillance says if this a departure from figures, it's NB.

Long-run GDP is basically population growth times productivity. Expect #China's new two-child policy to have an impact in 20 years

Impact of the #China decision to allow 2-child families won't be felt yet, but will be massive for the next generation in Asia, circa 2035+

10.31am GMT

We also have new consumer confidence figures for the eurozone, which show a small deterioration this month.

CHART: Italy's consumer confidence higher than Germany's for the first time in 5 years. France remains an outlier. pic.twitter.com/6ve3HoHQM2

10.27am GMT

The latest survey of European economic confidence is out, and it shows that firms are a little more optimistic.

The Commission's Economic Sentiment index has risen to 105.9 in the eurozone, up from 105.6 in September, and closer to the wider EU measure.

10.07am GMT

Traders in Frankfurt aren't too impressed by Deutsche Bank's new turnaround plan.

Shares in the company have slumped by 6% this morning, as investors digest the thousand of job cuts announced by John Cryan today. His decision to axe dividends in 2015 and 2016 has not helped the mood.

"We still believe there are major risks here and therefore think a capital increase in 2016 is still highly probable," Citi analysts said in a note.

A trader said: "Investors are very disappointed. Two years of no dividends and CEO Cryan cautions 2016 and 2017 won't be strong in terms of business either. That's a long time and shareholders are wondering why they should stay invested."

9.53am GMT

Something for London property owners to ponder...

UBS Real Estate Bubble Index shows majority of of world cities significantly overvalued. London is especially bubbly pic.twitter.com/4RcmbR9lfv

9.41am GMT

Today's US growth report (due in under three hours) could be less grim than some economists predict, reckons Ilya Spivak, currency strategist at DailyFX.

He believes that Wall Street forecasts may not capture the latest economic data, such as better-than-expected trade figures released yesterday. So the slowdown might not be quite as severe....

The preliminary set of third-quarter US GDP figures is in focus. The annualized growth rate is expected to register at 1.6%, down from 3.9% recorded in the three months through June. US economic news-flow has improved relative to consensus forecasts recently, hinting analysts' models are underestimating the economy's vigor and opening the door for an upside surprise.

Such a result may boost the likelihood of a 2015 Fed rate hike in the minds of investors, pushing the US Dollar higher. The impact on risk sentiment trends is unclear for now but whatever happens may help establish a dominant paradigm in the days and weeks ahead.

9.23am GMT

Deutsche Bank has also revealed that 4,000 of its 9,000 job cuts will fall in Germany.

Staff who survive the cull could also be also hit in the pocket. John Cryan says it would be "unacceptable" to not share the consequences of recent poor behaviour.

9.15am GMT

It's a black morning for Deutsche Bank staff, as new chief executive Jon Cryan wields the axe at Germany's biggest bank.

"We must reduce Deutsche Bank's complexity"

8.50am GMT

Those disappointing results from Barclays and Royal Dutch Shell have helped to wipe almost 1% off the FTSE 100 this morning.

The blue chip index is down 53 points at 6383, with mining stocks among the big fallers.

Miners in the bad books again. $FTSE pic.twitter.com/U51OpSBvwc

Helping drag the commodity sector as a whole further into the red was Shell; announcing its third quarter results less than 48 hours after revealing its latest ($2 billion) write-down in relation to its failed Carmon Creek project, the oil giant slipped to a $6.1 billion loss after the cost of ending multiple long term projects added up to a whopping $8.2 billion.

This pushed Shell nearly 2% lower after the bell, worsening the situation in an already loss-loving sector.

8.34am GMT

Shares in Barclays have fallen by 3.5% in early trading, after the bank missed profit forecasts and posted a 10% drop in adjusted earnings.

Barclays also revealed that ring-fencing its retail banking arm will cost 1bn, on top of 2.3bn bill on legal costs and compensation.

As its new boss, Jes Staley, pledged to clean up the bank's reputation, Barclays said it was facing 290m redress costs as a result of an internal review relating to rates for foreign exchange transactions between 2005 and 2012.

The figures were released a day after Barclays named Staley, a US investment banker, as its new chief executive. He is on a 10m pay packet and will start on 1 December.

Related: Barclays legal bill hits 2.3bn in nine months

8.25am GMT

The UK government has taken another step towards untangling itself from the banking sector, by selling more shares in Lloyds Banking Group.

8.12am GMT

Morgan Stanley reckons the Federal Reserve will be feeling pleased with itself:

MS: Fed was aiming for markets to adjust to better price-in a December hike. At close-to 50/50 now, the Fed got what it was looking for.

8.10am GMT

Britain's economy may be slowing down, but house prices are still rising.

"Over the past five months annual price growth has remained in a fairly narrow range between 3% and 4%, broadly consistent with earnings growth over the longer term.

While this bodes well for a sustainable increase in housing market activity, much will depend on whether building activity can keep pace with increasing demand.

8.04am GMT

This explains why the markets are taking the Federal Reserve's comment about considering a rate rise at its "next meeting" so seriously:

JPM's Feroli: the statement's direct reference to the 'next' mtg was the first such mention of possible action at a subsequent mtg since '99

7.59am GMT

Today's US GDP report will probably show that growth has fallen back below the 2% trend rate.

The Wall Street Journal explains:

The economy has grown at little better than a 2% pace since the recovery began in mid-2009. That's largely because a quarter or two of above-trend growth has been upended by a weak performance.

If the third-quarter data turns out as economists project, growth for the year will have decelerated from last year's 2.4% increase.

7.53am GMT

Before last night's Fed meeting, investors were only pricing in a 35% chance that US borrowing costs would rise in December. It's now a 48% chance:

Morning Note: 1. Premier Li floats 6.5% target. 2. DB plans to scrap dividend. 3. And there was a Fed meeting... pic.twitter.com/6IZW1ryiXy

7.49am GMT

In a few hours we find out how badly the US economy has suffered from the problems in emerging markets, and China's slowdown.

7.32am GMT

Good morning , and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Today we'll be mopping up the reaction to last night's Federal Reserve meeting, where US policymakers floated the serious possibility of raising interest rates in December.

"In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation."

A new sentence in the Fed monetary policy statement has put a December rate hike by the Fed back on the table.

G10 currencies slid against a resurgent US dollar, while the worst was left for emerging market currencies. The Korean won, Indonesian rupiah and Malaysian ringgit saw the heaviest selling in Asia.

#Dollar at 2-1/2-month high after Fed keeps Dec rate hike on agenda. Euro trades <$1.10. https://t.co/3tvmIjbBv3 pic.twitter.com/MEpU4ADLhJ

Deutsche Bank posts a6bn Q3 loss.

LATEST: Barclays 3rd-quarter adjusted pretax profit is 1.4 billion ($2.1 billion), down 13% https://t.co/CodSGQmEeQ pic.twitter.com/xNmRCIrgwm

Oil Giant Shell Slumps To 4bn Quarterly Loss https://t.co/c7oH8bYvny pic.twitter.com/MmSaJXMYd0

CITY AM: the 33% club #tomorrowspaperstoday pic.twitter.com/NZ6Svjjda8