Trump: 'US is the envy of the world'
US growth hits 4.1%; BP unveils shale deal
The US economy grew at its fastest pace in nearly four years in the second quarter, expanding at an annualised rate of 4.1%.
The gains were driven by strong consumer spending, business investment and a surge in exports as firms rushed to beat new trade tariffs.
US President Donald Trump described the acceleration as proof his policies are working.
The report from the Commerce Department showed exports grew by more than 9%, the fastest rate since the fourth quarter of 2013, boosted in part by companies seeking to avoid new trade tariffs.
“These numbers are very, very sustainable. This isn’t a one-time shot. I happen to think we’re going to do extraordinarily well in our next report next quarter. I think it’s going to be outstanding,” Mr Trump said in a media briefing on the White House’s South Lawn.
“We are the economic envy of the entire world,” he said, adding that the US is “on track to hit an average GDP annual growth of over 3% and it could be substantially over three.”
He also noted a $50bn reduction in the US trade deficit that he said is the result of his hardline trade policies,
But many analysts cautioned that growth could cool in coming months, some believing the surge is a blip and that he will be emboldened by the data to maintain his policies on trade, tax and spending. He made no mention of the support he is being forced to give to farmers damaged by his dispute with China.
Stock markets were lifted on the news and on the back of positive company results as well as an easing of transatlantic trade tensions.
Investors were buoyed by signals from the meeting between US and EU negotiators which left the door open for tariffs to be withdrawn or reduced and a full-scale trade war avoided.
The MSCI All-Country World Index, which tracks shares in 47 countries, was up 0.1% soon after European trading began.
Reuters news agency said it was set for a sixth straight session of gains, a run not seen since February, and was headung for its fourth weekly gain on the trot.
There was also a raft of positive company and economic news, including a significant deal involving BP.
Traders acknowledged that while the prospect of tariffs on European cars has diminished, it hasn’t gone away completely and tensions continue between the US and China.
In corporate news Amazon reported a 39% leap in second quarter revenue and forecast strong sales in the autumn. It posted a profit that was double Wall Street’s target. Shares rose more than 3% in after-hours trade and offered some comfort following a profit warning the previous day by Facebook which saw its stock plunged 19%.
BP said it had agreed to buy US shale oil and gas assets from global miner BHP Billiton for $10.5 billion, the British company’s biggest deal since it bought oil company Atlantic Richfield in 1999. It will increase BP’s US onshore oil and gas resources by 57%.
Chief executive Bob Dudley (pictured) described it as “a transformational acquisition” adding that it was “a major step in delivering our upstream strategy and a world-class addition to BP’s distinctive portfolio.”
BP said it would increase its quarterly dividend for the first time in nearly four years and announced a $6 billion share buyback, to be partly funded by selling some upstream assets.
In mid-morning trade on the London market BP’s shares were trading 0.4% higher.
Later today, the US will release the first estimate for second quarter GDP and economists are expecting the world’s largest economy to have grown at 4.1% between April and June. This compares to 2% in the first quarter.