-Cameron Bagrie, ANZ chief economist
US economic growth rose more than expected in the fourth quarter, according to the preliminary data. Gross domestic product grew at a 2.2% annual pace, revised down from the 2.6% pace estimated last month, the Commerce Department reported. The economy expanded at a 5% rate in the September quarter. With consumer spending accelerating at its fastest pace since the first quarter of 2006 and strong gains in other measures of domestic demand, the slowdown in growth is seen to be temporary. Growth in consumer spending, which makes up more than two-thirds of US economic output, was revised down to a 4.2% pace in the final quarter, still the quickest since the first quarter of 2006. For 2014 as a whole, US GDP expanded 2.4%, slightly better than the average 2.2% growth of 2010-2013.
Meanwhile, US pending home sales rose to the highest level in more than a year in January, raising hopes that the weak housing recovery may be gaining momentum. According to the National Association of Realtors, the pending home sales index climbed 1.7% last month, reversing a slide in December, which was revised to a 1.5% decline compared with the 3.7% drop reported previously. A separate report showed US consumer sentiment slid from the highest level in 11 years in February due to unexpectedly severe weather. The University of Michigan's final February reading was 95.4, falling from January's 98.1, the highest since January 2004.
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