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US economic growth dips
January 31, 2016, 6:36 am

A mixed bag of economic data coupled with poor Wall Street performance could delay further interest rate hikes [Xinhua]

A mixed bag of economic data coupled with poor Wall Street performance could delay further interest rate hikes [Xinhua]

The US Department of Commerce says annualized growth in the Q4 was only 0.7 per cent, down from two per cent the previous quarter.

In its report on Friday, the Commerce Department blamed warmer temperatures for a drop in consumer spending in seasonal retail.

US exports were also down as the strengthened dollar in Q4 made American products more expensive in European and Asian markets.

(The dollar has lost ground against a basket of six major currencies in recent days)

But the report also indicated that new single-family home sales were on the rise despite dismal performance on Wall Street.

December sales rose 10.8 per cent to 544,000 – up from 500,000 the previous month.

This was echoed in the minutes of the Fed’s Open Market Committee (FOMC) last week.

“Information received since the Federal Open Market Committee met in December suggests that labor market conditions improved further even as economic growth slowed late last year. Household spending and business fixed investment have been increasing at moderate rates in recent months, and the housing sector has improved further; however, net exports have been soft and inventory investment slowed,” the FOMC statement last Wednesday said.

Meanwhile, low oil prices have pummeled energy sector investments as major conglomerates scale back to weather the dropping markets, and thousands of employees lose their jobs.

Investments in the energy sector in the US are down 35 per cent in 2015, the report added.

US GDP growth is 2.4 per cent in 2015, but expected to grow this year.

The mixed data is likely to pressure the FOMC to back away from an interest rate hike in December.

Most analysts believe that the FOMC will take its time to continue to study the effect low global commodities and oil prices will have on the overall health of the US economy.

The BRICS Post with inputs from agencies

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