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US economy grows in Q2 at fastest rate in nearly four years

US second quarter economic growth was stronger than previously estimated, as gross domestic product (i.e. the value of all goods and services produced across the economy) rose at a 4.2 per cent annual rate, according to a report by the Commerce Department. This marked the strongest growth rate in nearly four years.

The agency had earlier estimated the second-quarter growth at a 4.1 per cent annual rate. Economists expected an unchanged reading of 4.1 per cent. The revision was partly the result of stronger business investment than earlier forecast and a slight downward revision to consumer spending.

In the meantime, German unemployment continued to fall in August, as companies took on more workers to increase production capacity. The German Federal Labour Agency reported last week that the number of Germans out of work fell by a seasonally-adjusted 8,000 to 2.33 million in July. In the meantime, the jobless rate held steady at a post-unification low of 5.2 per cent.

These data are further evidence that the economy is still steaming ahead, even though some German employers have warned about the impact of increased global trade tensions. The German central bank predicts that the economy will expand by two per cent this year after a 2.2 per cent growth in 2017.

Finally in the UK, shop prices rose for the first time in more than five years in August, according to the British Retail Consortium (BRC). Shop prices edged up 0.1 per cent in August, following a 0.3 per cent decline in July. This broke a downtrend deflationary that lasted for 63 months, the BRC said.

Increasing food price inflation as well as weaker non-food price deflation contributed to the return of shop prices to inflation. However, shop price inflation remained well below the headline consumer price inflation. Non-food deflation continued to ease in August, to one per cent from 1.4 per cent in July. This was the lowest rate since April 2013.

This report was compiled by Bank of Valletta for general information purposes only.

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