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The US economy expanded in the July-September quarter at an annual rate of 3.6 per cent, up from an initial estimate of 2.8 per cent, the federal Bureau of Economic Analysis had reported on Thursday.
A surge in business inventories proved to be even bigger than first estimated. It was the largest quarterly jump in 15 years and drove the revision. Slowing imports and a bump in state and local government spending also contributed.
The growth in gross domestic product (GDP) was the fastest since the first quarter of 2012.
After the US expansion screeched nearly to a halt with an annualised 0.1 per cent growth in October-December 2012, the economy has been rebounding this year. GDP growth rose to 1.1 per cent in the first quarter and 2.5 per cent in the April-June period.
US annual GDP is about $16.9 trillion.
The sharp growth in business inventories could foreshadow slower orders in the fourth quarter as companies work down stockpiles. The inventory spike accounted for nearly half of third quarter growth and papered over weak consumer demand, which did not bode well for the crucial Christmas shopping season now under way.
The revised third quarter GDP was due in late November, but postponed because of the 16-day government shutdown during October’s fiscal stand-off in Congress. The advance estimate on November 7 was based on some incomplete information due to the disruption in data collection.
The October deadlock in Congress, which saw non-essential government operations idled in the absence of budget legislation before a last-minute temporary deal staved off a technical default on federal obligations, was expected to dent fourth quarter economic growth.
The fiscal crisis already contributed to a plunge in consumer confidence in October and a further drop in November, according to the long-running Conference Board survey of consumer sentiment.
The final estimate of third quarter GDP is due on December 20. The advance estimate of October-December GDP is scheduled for January 30.
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