US figures calm fears of growth slowdown

Gross domestic product expanded at a 3 per cent annual rate, the quickest pace since the second quarter of 2010, the Commerce Department said yesterday in its second estimate.

The reading, which was up from the 2.8 per cent pace the government reported last month and reflected modest upward revisions to almost all components of GDP, added to the recent run of fairly upbeat economic reports.

The tone of the report was further bolstered by upward revisions to income data, which should help support consumer spending in the face of rising gasoline prices.

“Growth is still on the right path, but we are not going to see any acceleration. Income was revised up so it removed one of headwinds to growth in the beginning of the year,” said Yelena Shulyatyeva, an economist at BNP Paribas in New York.

Other data showed the continued resilience in manufacturing, with the Institute for Supply Management-Chicago’s business barometer in February rising to 64, a 10-month high, from 60.2 in January.

The upbeat reports helped to lift US shares, while prices for Treasury debt weakened modestly. The dollar rose against a basket of currencies.

So far this year data ranging from employment to manufacturing have shown underlying strength in the economy, reducing the need for the Federal Reserve to ease monetary policy further.