US economic growth stronger than expected at 3.8% in second quarter

The US economy grew at a stronger pace than expected in the second quarter of the year, according to the latest reading from the Bureau of Economic Analysis on Thursday, amid a rise in consumer spending.

US gross domestic product rose 3.8% quarter-on-quarter on an annualised basis in the three months to June, upwardly revised from a 3.3% rise previously reported.

The first quarter saw the US economy shrink 0.5%.

The annualised calculation shows how much the economy would expand if that quarterly pace of growth continued for a whole year, according to the BEA.

"The increase in real GDP in the second quarter primarily reflected a decrease in imports, which are a subtraction in the calculation of GDP, and an increase in consumer spending. These movements were partly offset by decreases in investment and exports," the BEA said.

The US economy grew 2.1% on-year in the second quarter, picking up speed from a 2.0% rise in the first.

Meanwhile, BEA data showed inflationary pressure was stronger than expected in the second quarter. The core personal consumption expenditures index rose 2.6% on-quarter, ahead of the previous forecast of a 2.5% hike.

The headline PCE reading showed 2.1% on-quarter growth, above the second estimate of 2.0%, but in line with the first reading.