Washington — A resilient American consumer helped the US economy expand more than forecast in the third quarter, assuaging concerns for now of a more pervasive slowdown tied to weakening business investment and faltering export markets.

GDP increased at a 1.9% annualised rate, according to US commerce department data on Wednesday that topped forecasts in a Bloomberg survey that anticipated 1.6% growth. Still, that is down from 2% in the second quarter and is the lowest since the end of 2018.

The gain mainly reflected strength in consumer spending, the biggest part of the economy, which increased at a 2.9% rate and exceeded projections for a 2.6% rise. For businesses, non-residential fixed investment fell the most since late 2015.

“It’s the same theme: strong consumer, weak business,” said Michelle Girard, chief US economist at NatWest Markets. “The question is, which wins out? We lean towards the latter. We think that, actually, the weakness in business will be more persistent and that ultimately the consumer will soften up.”

At the same time, “nothing in these numbers necessarily answers that question”, Girard said. “It just continues to suggest that is the issue.”

The growth figures come just hours before US Federal Reserve officials are expected to announce a third straight interest-rate cut to support the expansion, and ahead of Friday’s jobs report, which economists project will show hiring slowed further. Signs of stabilisation may be a welcome sign for US President Donald Trump as he campaigns on his economic record, though his trade war with China and faltering global growth have weighed on the expansion.

Year-on-year GDP increased 2% during the quarter, the weakest pace of Trump’s presidency and putting his goal of 3% annual growth further out of reach for the full year, following 2.5% in 2018.

A separate report on Wednesday from the ADP Research Institute showed private payrolls rose by a better-than-estimated 125,000 in October, rebounding somewhat from a four-month low.

The GDP report’s composition showed a second straight contraction in non-residential investment, which fell an annualised 3% after declining 1% in the second quarter. Net exports were a slight drag on the expansion, subtracting 0.08 percentage points from growth as inventories also weighed slightly. Federal spending drove a gain in government consumption.

The weakness in business investment was led by structures and equipment, which both dropped the most in more than three years

Final sales to domestic purchasers rose an annualised 2% after 3.6% in the previous three months, signaling a moderation in underlying demand.

The report on the GDP, the broadest measure of all goods and services, isn’t likely to swing the US Fed’s rate decision as officials close a two-day meeting, though they may see greater consumer strength as an important sign that the economy is weathering sluggishness from overseas markets.

The International Monetary Fund (IMF) recently cut its projection for global growth this year to 3%, the lowest since the financial crisis, as signs of stress menace economies from China to Europe. US goods-trade figures this week showed exports and imports both fell in September to the lowest levels in more than a year.

“The most important question lingering over the growth outlook for the next few quarters is whether consumers will be able to adequately shoulder the burden, as business investment and exports languish in response to economic uncertainty, trade tensions and dollar strength,” said economists Carl Riccadonna, Yelena Shulyatyeva and Eliza Winger. “As of the third quarter, consumers were holding up adequately; this is not surprising to Bloomberg Economics, given the resilience of consumer attitudes and relative health of the labour market.” 

As the longest US expansion on record shows more signs of cooling, in part because of the fading effects of the 2018 fiscal stimulus, different parts of the world’s largest economy are giving mixed signals. The unemployment rate has fallen to a half-century low, underpinning consumers and keeping sentiment readings near historical highs. Wednesday’s report showed disposable incomes after inflation increased an annualised 2.9% after a 2.4% pace in the prior quarter.

On the flip side, manufacturing, which makes up 11% of the economy, has weakened further as a widely watched private gauge hit a 10-year low. Companies, including oil and gas exploration firms, have reined in capital outlays to preserve shareholder value.

The weakness in business investment was led by structures and equipment, which both dropped the most in more than three years. Structures contracted at a 15.3% rate, shaving nearly a half a percentage point from growth, driven by a decrease in oil and gas exploration. Computers and aircraft led the decrease for equipment.

Personal consumption contributed 1.93 points to third-quarter GDP growth while government added 0.35 points. Residential real estate contributed to growth for the first time since the end of 2017 amid lower mortgage rates, giving a 0.18-percentage-point boost as the sector rebounded to a 5.1% growth pace.

The US Fed’s preferred underlying inflation measure, the personal consumption expenditure price index excluding food and energy, rose at a 2.2% annual pace in the quarter, about in line with policy makers’ 2% objective.

The second-quarter GDP figures will be revised in November and December as additional source data are compiled.