US economic growth was moderately stronger in the fourth quarter than previously thought, the US Commerce Department reported today.
GDP, which measures total goods and services output within US borders, expanded at a 2.5 per cent annual rate instead of 2.2 per cent, the department said in its final revision of fourth-quarter economic performance.
Economists had expected the final fourth-quarter reading of GDP growth to be unrevised at 2.2 per cent. The final figure was up from a 2 per cent rate in the third quarter and meant the economy expanded by a solid 3.3 percent during the whole of 2006.
It was the third straight year that GDP expanded at a rate over 3 per cent, following growth of 3.2 per cent in 2005 and 3.9 per cent in 2004.
The department said companies added to inventories at a $22.4-billion annual rate in the closing quarter of 2006 rather than the $17.3 billion rate it reported a month ago, and said that was the main reason for the upward revision in fourth-quarter GDP. Higher inventories were mostly accounted for by larger stocks of motor vehicles.
Larger inventories can reflect a backlog of unsold goods or businesses building stocks up in anticipation of better sales ahead.
A prices gauge favoured by the Federal Reserve - personal consumption expenditures excluding food and energy items - advanced at a slightly slower 1.8 per cent annual rate in the fourth quarter instead of the 1.9 per cent estimated a month ago and was down from 2.2 per cent in the third quarter.