The Commerce Department also said Friday that the economy grew a little better than previously thought in the January-March quarter. It raised its estimate to a 2 percent rate, up from 1.9 percent.
Growth at or below 2 percent isn’t enough to lower the unemployment rate, which was 8.2 percent last month. And most economists don’t expect growth to pick up much in the second half of the year. Europe’s financial crisis and a looming budget crisis in the U.S. are expected to slow business investment further.
“The main take away from today’s report, the specifics aside, is that the U.S. economy is barely growing,” said Dan Greenhaus, chief economic strategist at BTIG LLC. “Along with a reduction in the actual amount of money companies were able to make, it’s no wonder the unemployment rate cannot move lower.”
Some economic data improved over the course of the April-June quarter, while others worsened. Hiring, for example, rose slightly from April to May to June. But home sales weakened.
Stocks rose as investors to shrug off the weak U.S growth and focus on a pledge from the European Central Bank president to keep the euro together. The Dow Jones industrial average increased 113 points in midday trading, and broader indexes also gained.