Expressed at an annualized rate, real GDP grew 1.0% in the third quarter, after expanding 2.3% in the second quarter.
Business investment in plant and equipment recorded its strongest quarterly increase so far this year, as investment in machinery and equipment expanded 6.5% in the third quarter. An increase in consumer spending also contributed to the growth in final domestic demand.
Lower exports (-1.3%) and lower investment in housing (-1.3%) restrained GDP growth.
The increase in the goods-producing industries (+0.8%) significantly outpaced that of the services industries (+0.1%) for a fourth consecutive quarter.
Manufacturing, mining and the public sector were the main sources of growth in the third quarter. The increase in manufacturing was concentrated in the production of durable goods, while the strength in mining was attributable largely to higher activity at copper, nickel, lead, and zinc mines. Construction and retail trade also contributed to the overall increase in GDP. Conversely, decreases were recorded in the output of real estate agents and brokers, as well as in wholesale trade and in the finance and insurance sector.
Consumer spending on goods and services advanced 0.9% in the third quarter, similar to the average growth of the previous five quarters. Consumers increased their purchases of services and their purchases of all three major categories of goods.
Expenditures on new and used motor vehicles grew 1.8% after two consecutive quarters of decline.
Purchases of clothing and footwear also bounced back after falling in the previous quarter.
Spending on furniture, furnishings, and household equipment and maintenance declined 0.6% after edging down 0.2% in the previous quarter.
Housing investment declined 1.3% in the third quarter, the first decline since the first quarter of 2009. Expenditure on ownership transfer costs related to housing resale activity was down 10%, on the heels of a 13% drop in the second quarter.
Business investment in plant and equipment expands
Business investment in plant and equipment expanded 4.6%. This was the third quarterly increase in 2010, and the first time that quarterly growth exceeded 4% since 2005.
Investment in machinery and equipment rose 6.5%, a third consecutive quarterly increase. The main contributors to the third-quarter gain were industrial machinery (+7.9%) as well as computers and other office equipment (+11%).
Investment in buildings and engineering projects grew 2.6%.
Investment in plant and equipment increase
The 8.7% year-over-year increase in business investment in plant and equipment was in sharp contrast to the 20% annual decline registered in 2009.
Exports of goods and services declined 1.3% after four consecutive quarters of growth. The main contributors to the decline in goods exports were automotive products (-2.1%) and energy products (-8.5%), while commercial services (-1.7%) contributed the most to the decline in services exports.
Imports of goods and services were up 1.6%, the fifth consecutive quarterly increase. Machinery and equipment (+6.3%) contributed the most to the 2.4% increase in imported goods. Imports of services fell 2.1%, with declines in four out of five major categories.
Corporate profits increased 0.7% in the third quarter, after a 0.6% decline in the previous quarter. Earnings results were mixed with notable increases in oil and gas extraction and motor vehicle parts manufacturing. Wholesale and retail trade industries were among those with lower earnings. Government business enterprise profits fell 3.9%.
Personal income increased 0.6%. Personal disposable income, however, declined 1.5% as income taxes paid returned to a more typical level. There were large...