The US economy grew faster than initially thought in the third quarter, notching its quickest pace in three years, buoyed by robust business spending on equipment and an accumulation of inventories.
Gross domestic product expanded at a 3.3 per cent annual rate last quarter, which was also boosted by a rebound in government investment, the Commerce Department said in its second GDP estimate on Wednesday. That was the fastest pace since the third quarter of 2014 and a pickup from the second quarter’s 3.1 per cent rate.
The economy was previously reported to have grown at a 3.0 per cent pace in the July-September period. It was the first time since 2014 that the economy experienced growth of 3 per cent or more for two straight quarters.
The growth pace, however, likely exaggerates the health of the economy as inventories, goods yet to be sold, accounted for nearly a quarter of GDP growth. Excluding inventory investment, the economy grew at a 2.5 per cent rate.
When measured from the income side, output also expanded at a 2.5 per cent rate. Economists had expected that third-quarter GDP growth would be raised to a 3.2 per cent rate. The brisk growth pace strengthens the case for the Federal Reserve to raise interest rates next month. The US central bank has increased borrowing costs twice this year.