Real gross domestic product (GDP) advanced 1.0% in the first quarter, following a 0.8% increase in the previous quarter. Final domestic demand rose 0.6%. On a monthly basis, real GDP by industry increased 0.3% in March.
Business investment in plant and equipment increased 3.2%, the fifth consecutive quarterly expansion. Investment in machinery and equipment rose 3.7% in the quarter. Business inventories accumulated, contributing to the growth in overall business investment.
Exports grew 1.6% in the first quarter, following a 2.1% increase in the fourth quarter of 2010. Imports rose 2.2%, after edging down 0.1% in the previous quarter.
All major industrial sectors, except for retail trade and arts, entertainment and recreation, increased their output in the first quarter. Goods production rose 1.8% while service-producing industries increased 0.7%. Manufacturing as well as mining and oil and gas extraction were the largest contributors to growth. Construction, transportation and wholesale trade also recorded notable increases.
Expressed at an annualized rate, real GDP in the first quarter grew 3.9%, after expanding 3.1% in the fourth quarter of 2010. By comparison, real GDP in the United States grew 1.8% in the first quarter.
Business investment in plant and equipment increases
Business investment in plant and equipment rose 3.2% in the first quarter with increases in both non-residential structures (+2.8%) and machinery and equipment (+3.7%). Increases in plant and equipment investment have averaged 3.8% since the first quarter of 2010.
Business investment in engineering structures, which rose 3.7%, contributed the most to the increase in non-residential structures, while investment in buildings grew 0.6%.
Investment in industrial machinery, up 5.8%, contributed the most to the overall increase in machinery and equipment.
Business inventories build up
Business inventories increased $10.7 billion in the first quarter, after a small accumulation in the fourth quarter of 2010. Business inventory levels have been on an upward trend since the fourth quarter of 2009, in line with increased sales volumes.
Durable goods held by wholesalers and retailers accounted for most of the inventory accumulation in the first quarter.
Farm inventories increased after three consecutive quarterly reductions.
Imports up
Imports of goods and services increased 2.2% in the first quarter, after declining 0.1% in the previous quarter. Imports of automotive products, which rose 13%, contributed the most to the overall growth in goods imports. Imports of machinery and equipment, the second largest contributor to first quarter growth in imports of goods, have recorded seven consecutive quarterly increases.
Imports of services rose 2.0%, compared with a 2.5% growth in the previous quarter. First quarter increases were led by transportation services (+2.8%) and travel services (+2.1%).
Exports increase again
Exports of goods and services increased 1.6% during the quarter, following a 2.1% rise in the fourth quarter of 2010. Exports of goods were up 2.0% while services exports declined 1.0%. On average, exports have grown 1.8% since the third quarter of 2009.
Exports of energy (+8.9%) and automotive products (+6.5%) contributed the most to the gain in exports of goods. Meanwhile, exports of machinery and equipment declined 3.6%, following three quarters of growth.
The decline in exports of services was mainly due to declines in transportation services
(-3.9%) and travel services (-3.0%).
Housing demand rises
Investment in housing rose 2.2% in the quarter. Expenditure on ownership transfer costs related to housing resale activity rose 8.0%, following a 17% gain in the previous quarter. Renovation activity increased 3.3% after three consecutive quarters of decline. In contrast, the value of new housing construction fell 1.1%.
Consumer spending remains unchanged
Consumer spending on goods and services was virtually unchanged in the first quarter, after increasing 1.1% in the fourth quarter of 2010. Consumers reduced their purchases of durable (-1.4%) and non-durable goods (-0.4%). However, consumers increased their purchases of services and semi-durable goods, each by 0.5%.
Expenditures on new and used motor vehicles declined 1.7%, after increasing 3.5% in the previous quarter.
Spending on furniture, furnishings and household equipment and maintenance declined 0.6%. This is the third decline in four quarters.
On the other hand, consumers increased their purchases of clothing and footwear by 1.7%, more than twice the pace of the previous quarter (+0.6%).
Incomes continue to rise
Nominal GDP continued to expand in the first quarter, growing 2.1%, a rate similar to that of the previous quarter (+2.2%).
Corporate profits increased 5.1%, as earnings for both financial and non-financial enterprises continued to grow.
Labour income grew 1.6%, up from the previous quarter's growth of 1.4%. Wages and salaries increased in both goods-producing (+2.3%) and services industries (+1.4%).
Personal disposable income rose 0.7%, a slower rate of growth than the 1.7% increase in the previous quarter. The decline in government transfers to persons in the quarter dampened disposable income growth.
The national saving rate was 6.6%, up from the fourth quarter 2010 rate of 5.5%. The income of all levels of government combined increased 1.5%, while government outlays were virtually unchanged. The national saving rate (6.6%) is now more than double the rate of 2.8% recorded in the third quarter of 2009. Increased saving in the corporate sector has been contributing to a higher saving rate.
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