US GDP revised up as PCE inflation stays at 3.4%

The US Commerce Department revised second-quarter economic growth up to 2.2 percent on Wednesday, while the Federal Reserve's preferred inflation gauge stayed at 3.4 percent year-on-year in August.

The new estimate for gross domestic product was 0.7 percentage points higher than the previous figure. The Bureau of Economic Analysis said consumer spending, investment and exports contributed to the increase in real GDP, while imports also rose and are subtracted in GDP calculations.

The department also revised first-quarter GDP growth up by 0.4 percentage points to 2.5 percent, mainly because of higher estimates for consumer spending and services exports.

In a separate release, the BEA said the Personal Consumption Expenditures price index, the Fed's targeted inflation measure, was unchanged from July after a revision to the earlier data. Core PCE inflation, which excludes volatile food and energy prices, was 3.0 percent year-on-year.

Markets are watching inflation data for signals on the Fed's next move. Earlier this month, the Fed raised interest rates for the first time in three years, and a US central banker said Tuesday there was no “urgency” to raise rates again while indicating one more increase could be needed before the end of the year.