Exports help US growth beat expectations

The US economy is doing better than expected, new figures out yesterday revealed.

But the fact that growth was revised upwards to 1.7 per cent from 1.5 per cent in the second quarter is unlikely to stave off fresh stimulus from the US Federal Reserve.

The Commerce Department said stronger export growth offset businesses failing to restock their inventories as a result of fears about demand from American consumers.

Another report showed that the housing market was picking up, with contracts to buy previously owned homes in July rising to the highest level since April 2010. However, the 1.7 per cent expansion is still down on the 2 per cent GDP increase in the first three months of the year.

Growth remains well below the 2 per cent to 2.5 per cent range needed each quarter if the country's jobless total is to remain steady.

Economists say this could prompt the US Federal Reserve to bring in fresh monetary stimulus.

Speculation the Fed would do this had earlier been dampened by improving job creation and a rebound in retail sales in January, although figures on inflation and business spending still supported action.

The economy's weakness could pose problems for President Barack Obama's re-election bid.