The rate of US growth picked up steam but wage growth undershot estimates, underscoring the economy’s recent patchy performance. Gross domestic product climbed at an annualised rate of 2.6 per cent over the period, from 1.2 per cent in the first quarter, the commerce department said on Friday. The reading came in slightly below Wall Street forecasts of 2.7 per cent. A slate of revisions also pushed the average growth pace from the first quarter of 2016 to the first three months of this year down by 0.1 percentage point to 1.7 per cent, emphasising policymakers’ frustration over the tepid rate of expansion despite continued progress in the labour market. Separate data released on Friday showed that total compensation and wages of civilian workers both rose 0.5 per cent in the three months ending in June, down from 0.8 per cent in the previous period. Total compensation, a figure that also includes benefits, was forecast to tick up by 0.6 per cent. Most economists expect wage growth to accelerate given that the unemployment rate is near its normal level, which should put employers in a position where they need to offer higher salaries to draw-in workers. Weak wage growth has contributed to disappointingly lukewarm inflation that has stubbornly remained below the Federal Reserve’s targets. Investors have been paying close attention to any signs of a pick-up and Friday’s data represent the latest disappointment.

Posted in: USA