U.S. economic growth revised down to 1.1 pct in Q2

The U.S. economy grew at an annual rate of 1.1 percent in the second quarter this year, down from a previous estimate of 1.2 percent, the Commerce Department said Friday.

The moderate growth in the second quarter followed a sluggish pace of 0.8 percent in the first quarter, underscoring the weak performance of the world's largest economy in the first half of 2016.

"The acceleration in real GDP (gross domestic product) in the second quarter primarily reflected an acceleration in PCE (personal consumption expenditure), a smaller decrease in nonresidential fixed investment, an upturn in exports, and a smaller decrease in federal government spending," the Commerce Department said.

Consumer spending remained the U.S. economy's driving force, expanding at an annual rate of 4.4 percent in the second quarter, up from an earlier estimate of 4.2 percent. That was the fastest growth rate since late 2014 and contributed 2.94 percentage points to GDP growth in the second quarter.

However, overall fixed investment, weighted down by contractions in equipment, structures and residential investment, went down 2.5 percent in the second quarter and subtracted 0.42 percentage point from the GDP growth.

Inventories fell by a revised 12.4 billion U.S. dollars in the second quarter, the first decline since 2011. That subtracted 1.26 percentage points from GDP growth in the quarter, the largest drag in more than two years.

Overall spending by federal, state and local governments fell by 1.5 percent in the second quarter, compared with a previous estimate of a 0.9 percent decline.

The PCE price index, a Federal Reserve preferred inflation indicator, increased 2 percent in the second quarter, compared to 0.3 percent growth in the first quarter.

Excluding volatile food and energy prices, the core PCE price index increased 1.8 percent, while the index grew 2.1 percent in the first quarter.

While Federal Reserve officials generally agreed that near-term risks to the U.S. economic outlook had diminished, the central bank kept the federal funds rate unchanged last month.

Some Fed officials preferred to wait for more evidence that U.S. inflation would rise to the central bank's objective of 2 percent on a sustained basis, while other officials anticipated that economic conditions would soon warrant another rate increase, according to the minutes of the Fed's July 26-27 meeting released this month.

Analysts said it's possible for the Fed to hike interest rates as soon as September. But about 71 percent of 62 economists surveyed by the Wall Street Journal this month believed that the Fed will wait until December to raise rates. Endi