The US economy grew at a 0.7 per cent annual pace in the first three months of this year as businesses sold off inventories, a Commerce Department report today showed.
It was the weakest quarterly expansion in GDP since 2002 but slightly better than the government's earlier 0.6 per cent estimate for growth during the quarter.
Businesses cut inventories at a $4.2 billion annual rate during the quarter, slightly less than the $4.5 billion annual rate in the previous estimate for the quarter but still big enough to pull growth down during the quarter.
But personal consumption spending that fuels two-thirds of national economic activity rose at a 4.2 per cent rate. This was slightly lower than the 4.4 per cent rate estimated a month ago but still a strong underpinning to keep the economy growing.
A prices measure favoured by Federal Reserve policy-makers - personal consumption spending excluding food and energy - was revised up during the quarter to a 2.4 per cent rate from the prior 2.2 per cent estimate.
This will likely be weighed by Fed officials as they meet today for a second day of a policy meeting at which they are expected to keep interest rates unchanged while reaffirming concerns over the risks of inflation.
Meanwhile initial claims for US jobless aid fell to 313,000 last week, slightly lower than expected, the Labor Department said today.