The U.S. economy grew at a moderate 2.5 percent rate in the spring as the biggest surge in export sales in seven years helped lift the fortunes of American manufacturers, the government reported yesterday.
The Commerce Department report on the increase in the gross national product, the broadest measure of economic health, showed an economy growing even faster than previously thought during the April-June quarter.
Economists noted that much of the strength was concentrated in an upturn in manufacturing, a sector depressed for two years by stiff foreign competition.
U.S. exports rose at an annual rate of 17.9 percent in the spring, the biggest quarterly improvement since early 1980.
This was sure to hearten the Reagan administration, which worked to reduce the dollar's value as a way of making American goods competitive again on overseas markets.
The rise in exports was accompanied by a turnaround in business investment, which jumped by 11.7 percent in the spring, the biggest increase in two years.
The new 2.5 percent GNP growth figure was an upward revision from a month ago, when the government had put growth at a 2.3 percent rate.
The new report also scaled back the increase in inflation during the spring, showing a price index tied to the GNP rising at an annual rate of 4.1 percent, down from an earlier estimate that prices were rising 4.3 percent.
"This report presents a more solid picture of the economy in the second quarter than before. We had better growth and lower inflation and that is the best kind of news to have," said Allen Sinai, chief economist of Shearson Lehman Bros. of New York.
For the first six months of the year, the GNP grew at a rate of 3.5 percent, up sharply from economic growth in all of 1986 of 2.9 percent, which had been the weakest performance since the end of the 1981-82 recession.
The administration predicts the economy will expand 3.2 percent this year.
With the strong performance in the first six months, the GNP will only have to average 3 percent growth through the end of the year to reach that goal.
The current recovery is already tied as the longest peacetime expansion in history. In October, it will break the record of 58 months set by the 1975-80 upturn.
The 2.5 percent GNP growth rate in the spring was down from a 4.4 percent rate in the January-March quarter. However, economists said the overall balance of growth was much healthier in the spring.
Virtually all of the strength in the first three months of the year came from a huge rise in business inventories, which was occurring while consumer spending was posting a rare decline.
In the spring, consumer spending and business investment rebounded while the nation's trade deficit improved for the third consecutive quarter, something that has not happened since mid-1980