US economic growth revised down to 1.6%

The US economy grew less than previously estimated in the second quarter of the year, with growth of just 1.6%.

The downward revision from 2.4% was actually better than analysts had been predicting and US share futures rose after the news.

However, coupled with some downbeat economic data this week, it is a further sign that the US economy is running out of steam and may enter a double-dip recession.

The revision primarily reflected a sharp acceleration in imports and a sharp deceleration in private inventory investment, the Bureau of Economic Analysis said.

Paul Ashworth, senior US economist at Capital Economics, said: 'Q2 wasn't as bad as the headline GDP figure looks but, unfortunately, that doesn't mean Q3 is going to be any better. It could easily be even worse. As it stands now, it looks like domestic sales growth slowed sharply.'

The spotlight now moves to Federal Reserve chairman Ben Bernanke’s speech this afternoon.

UK growth

UK GDP published this morning showed that the economy grew more than previously forecast in the second quarter, rising 1.2% rather than the previous estimate of 1.1%.

Also in the UK, house price data from the Land Registry showed that although there was a monthly increase in prices in July, the annual rate fell from 8.5% to 6.7%. 

At 14.20, the FTSE 100 was up 0.62% at 5187, having started the day on a downer after poor US economic figures.