Thu Sep 11, 2014 1:02pm EDT
<span id="articleText"/> (New throughout, adds details from report, comments from economists)
<span id="midArticle_0"/> By <a href="http://ift.tt/X2eBgR;Lucia Mutikani
<span id="midArticle_1"/> WASHINGTON, Sept 11 (Reuters) - The U.S. economy likely grew at a much faster pace in the second quarter than previously estimated, according to data on Thursday that showed a big jump in healthcare spending.
<span id="midArticle_2"/> The Commerce Department's quarterly services survey, or QSS, showed healthcare outlays increased at a much brisker clip than the government had assumed in its last estimate of gross domestic product in late August.
<span id="midArticle_3"/> As a result, economists said healthcare spending could add as much as three-tenths of a percentage point to second-quarter GDP growth, taking it to as high as a 4.7 percent annual rate.
<span id="midArticle_4"/> "Second quarter growth is on track to be the strongest since early 2006," said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.
<span id="midArticle_5"/> Growth in the April-June quarter was previously reported to have increased at a 4.2 percent pace.
<span id="midArticle_6"/><span id="midArticle_7"/> Prior to the QSS data, economists had already raised estimates for second-quarter growth by about 0.4 percentage points after construction spending and trade deficit figures for June came in better than the government had forecast.
<span id="midArticle_8"/> But inventories at wholesalers and manufacturers were a bit weaker, suggesting restocking was not as strong as estimated in the GDP report last month. That saw economists shaving second-quarter GDP growth estimates by two-tenths of a percentage point to a 4.4 percent annual rate.
<span id="midArticle_9"/> Growth estimates could shift again on Friday, with the release of retail data that may alter views on inventories and consumer spending.
<span id="midArticle_10"/> The QSS, which provides a comprehensive count of service sector revenues, is frequently a source of GDP revisions.
<span id="midArticle_11"/> With the introduction of President Barack Obama's signature healthcare law at the start of the year, healthcare spending has been particularly tough to estimate.
<span id="midArticle_12"/> Jim O'Sullivan, chief economist at High Frequency Economics in Valhalla, New York, said the big difference has been in healthcare spending on hospitals.
<span id="midArticle_13"/> In the last GDP report, hospital spending was reported to have increased at a 0.8 percent annual rate before adjusting for inflation, or to have declined at 1.4 percent rate when adjusted for inflation, said O'Sullivan.
<span id="midArticle_14"/> "But the data that came out today shows a 10.6 percent annual rate in nominal terms, which is about a 8.4 percent rate in real (inflation-adjusted) terms," he said. "It will probably add another three-tenths or so to GDP growth."
<span id="midArticle_15"/> Daniel Silver, an economist at JPMorgan in New York, said an upward revision to healthcare spending could lead to "a somewhat" stronger trend for services spending in the third quarter.
<span id="midArticle_16"/> Early readings on consumer spending in the third quarter have been lagging other data such as manufacturing, housing and employment, that have shown the economy on a stronger growth path. (Reporting by Lucia Mutikani; Editing by David Gregorio)
<span id="midArticle_17"/>
<span id="articleText"/> (New throughout, adds details from report, comments from economists)
<span id="midArticle_0"/> By <a href="http://ift.tt/X2eBgR;Lucia Mutikani
<span id="midArticle_1"/> WASHINGTON, Sept 11 (Reuters) - The U.S. economy likely grew at a much faster pace in the second quarter than previously estimated, according to data on Thursday that showed a big jump in healthcare spending.
<span id="midArticle_2"/> The Commerce Department's quarterly services survey, or QSS, showed healthcare outlays increased at a much brisker clip than the government had assumed in its last estimate of gross domestic product in late August.
<span id="midArticle_3"/> As a result, economists said healthcare spending could add as much as three-tenths of a percentage point to second-quarter GDP growth, taking it to as high as a 4.7 percent annual rate.
<span id="midArticle_4"/> "Second quarter growth is on track to be the strongest since early 2006," said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.
<span id="midArticle_5"/> Growth in the April-June quarter was previously reported to have increased at a 4.2 percent pace.
<span id="midArticle_6"/><span id="midArticle_7"/> Prior to the QSS data, economists had already raised estimates for second-quarter growth by about 0.4 percentage points after construction spending and trade deficit figures for June came in better than the government had forecast.
<span id="midArticle_8"/> But inventories at wholesalers and manufacturers were a bit weaker, suggesting restocking was not as strong as estimated in the GDP report last month. That saw economists shaving second-quarter GDP growth estimates by two-tenths of a percentage point to a 4.4 percent annual rate.
<span id="midArticle_9"/> Growth estimates could shift again on Friday, with the release of retail data that may alter views on inventories and consumer spending.
<span id="midArticle_10"/> The QSS, which provides a comprehensive count of service sector revenues, is frequently a source of GDP revisions.
<span id="midArticle_11"/> With the introduction of President Barack Obama's signature healthcare law at the start of the year, healthcare spending has been particularly tough to estimate.
<span id="midArticle_12"/> Jim O'Sullivan, chief economist at High Frequency Economics in Valhalla, New York, said the big difference has been in healthcare spending on hospitals.
<span id="midArticle_13"/> In the last GDP report, hospital spending was reported to have increased at a 0.8 percent annual rate before adjusting for inflation, or to have declined at 1.4 percent rate when adjusted for inflation, said O'Sullivan.
<span id="midArticle_14"/> "But the data that came out today shows a 10.6 percent annual rate in nominal terms, which is about a 8.4 percent rate in real (inflation-adjusted) terms," he said. "It will probably add another three-tenths or so to GDP growth."
<span id="midArticle_15"/> Daniel Silver, an economist at JPMorgan in New York, said an upward revision to healthcare spending could lead to "a somewhat" stronger trend for services spending in the third quarter.
<span id="midArticle_16"/> Early readings on consumer spending in the third quarter have been lagging other data such as manufacturing, housing and employment, that have shown the economy on a stronger growth path. (Reporting by Lucia Mutikani; Editing by David Gregorio)
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