U.S. GDP Growth Estimate Lowered to 2.4%, Pending Home Sales Rise

Nichole Harper
30 May, 2013
New York City

Stocks and indexes in New York traded higher and the economic growth in the first quarter was lowered in the second quarter. Pending home sales index increased 0.3% to the highest level since April 2010.

[R]11:05 AM New York – Stocks and indexes in New York traded higher and the economic growth in the first quarter was lowered in the second quarter. Pending home sales index increased 0.3% to the highest level since April 2010.[/R]

Stocks on Wall Street shrugged off a sharp plunge of 5% in Tokyo and market declines in Asia.

Weekly initial claims of unemployment increased 10,000 to 354,000 for the week ending on May 25, according to the Labor Department.

On the U.S. housing market two reports sent different signals. The average nationwide 30-year fixed mortgage rate increased to 3.81% in the last week, the highest rate in a year.

Separately, National Association of Realtors reported pending home sales index improved slightly in April, higher than annual average but below what is considered normal market functioning.

U.S. GDP Growth Estimate Lowered to 2.4%

The U.S. economy expanded at less than expected rate in the first quarter, according to the second revisions in the GDP estimate released by the Commerce Department today.

The GDP growth in the March quarter was lowered to 2.4% from the previous estimate of 2.5% and the third and final revision is expected to be released in a month.

Higher than previously estimated commercial construction slowdown weighed on the GDP estimate.

Bloated Defense spending dropped at a 12.1% annual rate compared to 11.5% rate previously estimated. The defense spending in the previous quarter dropped 22.1%, the largest back-to-back fall since the Korean War in 1954.

Corporate spending on equipment and software increased at 4.6% rate compared to 3% in the previous estimate. And, inventories added 0.63 percentage point to GDP in the first quarter, less than previous estimate of 1.03%.

Residential construction growth was revised lower to 12.1% annual rate from 12.6% in the prior estimate.

European Markets

In London trading, FTSE 100 index rose 0.3% or 21.17 to 6,648 and in Frankfurt the DAX index gained 0.8% or 67.50 to 8,404.

In Paris, CAC 40 index increased 0.8% or 34.54 to 4,009.

Asian Markets

Markets in Tokyo plunge and extend losses in major indexes from the peak reached on May 22.

The Nikkei index dropped 5% and extended losses from the peak to 11% and the Topix index fell 3.8% and dropped more than 10%.

Market indexes in Shanghai declined 0.3% and indexes in South Korea, Singapore, Indonesia, and Philippines declined.