Baku. 29 April. REPORT.AZ/ U.S. economic growth braked sharply to its slowest pace in two years as consumer spending softened and a strong dollar continued to undercut exports, but a pick-up in activity is anticipated given a buoyant labor market.
Report informs, Gross domestic product (GDP) increased at a 0.5 percent annual rate, the slowest since the first quarter of 2014, the Labor Department said on Thursday in its advance estimate, also as businesses doubled down on efforts to reduce unwanted merchandise clogging up warehouses.
The economy was also blindsided by cheap oil, which has hurt the profits of oil field companies like Schlumberger and Halliburton, resulting in business spending contracting at its fastest pace since the second quarter of 2009, when the recession was ending.
Economists polled by Reuters had forecast the economy expanding at a 0.7 percent rate in the first quarter. The economy grew at a 1.4 percent pace in the fourth quarter.
Almost all sectors of the economy weakened in the first quarter, with the housing market the lone star.
The situation in the futures market indicates that interest rates in best case will be raised in December.Delaying the Fed's decision to raise the key rate was the reason for falling dollar on the global foreign exchange market. The course of the main currency pair rose to 1.14 USD/EUR.
Analytical Group of Report News Agency believes that changes in foreign exchange market seriously affect the commodity markets and the process of the fall of the dollar will continue. " In turn, the depreciation of the dollar led to a rise in oil and gold prices.Over the past two days, gold has risen in price by 2.4% - up to 1275 dollars per ounce.This occurred against the background of negative interest rates in the euro area and Japan, not increase of Fed's key rate and the probability of its reduction. The upward trend in gold prices in 2016 will remain at the background of uncertainty in the global markets and risks of alternative investment instruments."
The number of active drilling rigs in the US last week fell by 8 units or 2,3% - up to 343 units, and last year - by 501 units, or 53.7%.The price of Brent yesterday, 28 April, rose to $ 48 / barrel and reached a peak in 2016.Today, oil is sold at a 77% higher than the January low of 27.1 USD/barrel in the period of crisis in the financial markets.It should be noted that today the consulting firm Baker Hughes will open the regular weekly report on the number of active rigs in the United States, where they are expected to decrease slightly.
Analytical Group of Report News Agency predicts the growth in oil prices to $53/barrel on the background of weakening US dollar.