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Slower US growth as housing starts plunge

Deutsche Presse Agentur
Published: Wednesday August 30, 2006

Washington- US economic growth slowed to an annual pace of 2.9 per cent in the second quarter as housing starts fell more than initially believed, the government said Wednesday. The rise in gross domestic product compared with a preliminary figure of 2.5 per cent a month ago, but was down from a roaring 5.6 per cent rate for the first quarter, the US Commerce Department said.

Economists have linked the slowdown to high oil and petrol prices that are taking a bite out of consumer spending and to a plunge in home building after two years of interest-rate hikes by the US Federal Reserve.

Home construction fell at an annual rate of 9.8 percent last quarter, more than the 6.3 per cent originally reported and the biggest drop since 1995.

Consumer spending, which accounts for about two-thirds of the world's largest economy, rose at a 2.6 percent annual pace after a 4.8 per cent surge in the first quarter of 2006, the report said.

© 2006 DPA - Deutsche Presse-Agenteur