Data showed that he US economy grew by an annualized 1.1 percent in Q1 2023, slowing from a 2.6 percent expansion in the previous quarter and missing market expectations of a 2 percent growth, a preliminary estimate showed.
It was the weakest pace of expansion since Q2 2022, as business investment growth slowed down, inventories declined, and rising interest rates continued to hurt the housing market.
Residential fixed investment contracted for the 8th consecutive period (-4.2 percent vs -25.1 percent in Q4) and private inventory investment subtracted 2.3 pp from the GDP (compared with an addition of 1.47 pp in Q4).
At the same time, non-residential fixed investment growth slowed sharply (0.7 percent vs 4.0 percent). Still, consumer spending growth accelerated to 3.7 percent (vs 1.0 percent in Q4) despite stubbornly high inflation and public spending increased at a faster 4.7 percent (vs 3.8 percent). Net external demand has also contributed positively to the GDP as exports rose more than imports.
Housing data also came in weak today. Pending home sales in the US fell by 5.2% month-over-month in March 2023, the first decline since November 2022 and missing market expectations of a 0.5% growth.
NAR Chief Economist Lawrence Yun said, “The lack of housing inventory is a major constraint to rising sales,” “Multiple offers are still occurring on about a third of all listings, and 28% of homes are selling above list price. Limited housing supply is simply not meeting demand nationally.“
The number of Americans filing for unemployment benefits fell by 16 thousand to 230 thousand on the week ending April 22nd, surprising market expectations of 249 thousand.
It was the first decrease in new unemployment claims in three weeks, challenging recent data that pointed to some softening in the labour market and resuming the trend of stubbornly tight labour conditions despite the Federal Reserve’s aggressive rate hikes.
The four-week moving average, which removes week-to-week volatility, fell by 4,000 to 236,000. On a seasonally unadjusted basis, claims fell by 3,478 from the previous week to 225,841.