US Q2 contraction sharpest in at least 73 years

Washington

THE United States economy suffered its sharpest contraction in at least 73 years in the second quarter because of the disruptions from the coronavirus, the government confirmed on Wednesday.

Gross domestic product (GDP) plunged at a 31.4 per cent annualised rate last quarter, the deepest drop in output since the government started keeping records in 1947, the Commerce Department said in its third estimate of GDP.

Output was previously reported to have contracted at a 31.7 per cent pace in the second quarter.

The economy has been on a comeback since the start of the summer, and GDP is expected to show a big snapback in the third quarter.

Economists polled by MarketWatch predict the US is likely to expand at a record 25 per cent annual clip during the July-to-September time frame. Third-quarter GDP will be released at the end of October.

The report followed data that showed US companies added 749,000 jobs in September, indicating the labour market's gradual rebound is continuing, as demand rises from the depths of the coronavirus pandemic.

Businesses' payrolls increased after an upwardly revised 481,000 rise in August, according to ADP Research Institute data released Wednesday. The median projection in a Bloomberg survey of economists called for a 649,000 gain in September.

While the gain could be viewed as good news for a labour market as businesses continue to hire in industries where demand is growing, ADP's measure of private employment is still more than 10 million below its pre-pandemic level. The persistent spread of the coronavirus remains a challenge, while a stalemate over federal aid for businesses and the unemployed is limiting momentum in the economy. REUTERS, BLOOMBERG