US lifted by better economic growth

The US economy grew faster than previously estimated in the third quarter, data showed yesterday, but still not enough to address stubbornly high unemployment.

Gross domestic product growth was revised up to an annualised rate of 2.5 per cent from 2.0 per cent as exports, and consumer and government spending were stronger than initially thought, the Commerce Department said in its second estimate.

Economists had expected GDP growth, which measures total goods and services output within US borders, to be revised up to a 2.4 per cent pace. The economy expanded at a 1.7 per cent rate in the second quarter.

Hide Ad
Hide Ad

"It wasn't inventories, which is good news," said Nigel Gault, chief US economist at IHS Global Insight in Lexington, Massachusetts. "You had positive surprises in spending to outweigh inventories. Hopefully, we can carry that momentum into the fourth quarter. It's good news."

US stock index futures held losses after the report as investors focussed on rising tensions on the Korean peninsula. US Treasury prices were steady at higher levels, while the dollar was weaker against the euro.

There are signs economic activity picked up mildly as the fourth quarter started, but growth will likely remain below the 3.5 per cent rate that economists say is needed to appreciably reduce a 9.6 per cent unemployment rate.

Concerns about the slow growth pace spurred the Federal Reserve early this month to ease monetary policy further through controversial purchases of $600bn worth of government bonds to drive ultra low interest rates even lower.