The U.S. economy expanded in the second quarter at the fastest rate since the last three months of 2011 as companies stepped up investment and households boosted spending.
Gross domestic product grew at a revised 4.6% annualized rate, up from a previous estimate of 4.2%, Commerce Department data showed. The increase matched the median forecast of 81 economists surveyed by Bloomberg News and followed a 2.1% decline in the first three months of the year.
Busier assembly lines at the nation’s factories and job growth that’s kept Americans spending indicate companies are a bit more upbeat about the prospects for demand.
“After a very aberrant first quarter, growth is looking stronger for the balance of the year,” Dana Saporta, U.S. economist at Credit Suisse Group AG in New York, said before the report. While the second quarter probably overstates the underlying trend in growth, “we’re not looking for a dramatic slowdown for the rest of the year, something close to 3 % growth for the second half looks likely.”
Forecasts for second-quarter GDP, the value of all goods and services produced in the U.S., ranged from gains of 3.4% to 5%, according to the Bloomberg survey. The estimate is the third and final for the quarter.
The revision reflected bigger gains in corporate spending on equipment and properties. Investment in nonresidential structures added 0.35 percentage point to second-quarter growth, the most since the first three months of 2012.
Business investment increased at a 9.7% annualized rate, up from a previously estimated 8.4% pace. Corporate spending on equipment was revised to an 11.2% rate from an earlier reading of a 10.7% increase, while outlays for structures climbed at a 12.6% pace in the second quarter.
The report showed consumer purchases, which account for almost 70% of the economy, increased an unrevised 2.5% at an annual rate.
Spending on services was also little changed from the previous estimate, contributing 0.42 percentage point to second-quarter GDP.
Inventories increased at an $84.8 billion annualized pace in the second quarter after a previously reported $83.9 billion annualized rate. In the first quarter they rose at a $35.2 billion pace. Stockpiles added 1.42 percentage points to GDP last quarter.
Economists project growth will cool to a more sustainable pace after the second-quarter rebound. The median forecast of 79 economists see GDP expanding an average 3% in the second half of 2014.
“Even 3% is a fairly good result given how disappointing this recovery has been,” Saporta said. “What we need to see in order for growth to continue is strengthening household spending and also strengthening business investment.”
Final sales to domestic purchasers, which exclude inventories, increased 3.4% in the second quarter, the most in four years, compared with a previously reported 3.1% increase.
The report also showed before-tax corporate profits rose 8.4% last quarter, the most since the third quarter of 2010 and compared with a previously reported 8% gain.
