U.S. economic growth was a bit more sluggish than initially thought in the second quarter as businesses aggressively ran down stocks of unsold goods, offsetting a spurt in consumer spending.
Gross domestic product expanded at a 1.1 percent annual rate, the Commerce Department said on Friday in its second estimate of GDP. That was slightly down from the 1.2 percent rate reported last month.
The revision also reflected more imports than previously estimated as well as weak spending by state and local governments. The economy grew at a 0.8 percent pace in the first quarter. It grew 1.0 percent in the first half of 2016.
The revision to second-quarter GDP growth was in line with economists' expectations. The economy has struggled to regain momentum since output started slowing in the last six months of 2015, which puts it in danger of stalling.
While data so far for the third quarter has been mixed, a strong labor market should continue to support consumer spending and underpin growth in the coming quarters. Output will also likely get a boost as businesses restock warehouses after liquidating inventories in the second quarter.
The government also reported that after-tax corporate profits fell at a 2.4 percent rate last quarter after increasing at an 8.1 percent pace in the first quarter. Weak profits could limit an anticipated rebound in business spending.
With profits declining, an alternative measure of growth, gross domestic income, or GDI, increased at only a 0.2 percent rate in the second quarter, the weakest since the first quarter of 2013. GDP meaures the economy's performance from the income side. It increased at a 0.8 percent pace in the first quarter.
Business inventories fell $12.4 billion in the second quarter, the first drop since the third quarter of 2011, instead of the $8.1 billion reported last month.