Hi °C | Lo °C The US economy grew faster than previously estimated in the third quarter as exports and government spending provided a lift - but that boost is likely to be lost amid slowing global demand and a move towards tighter fiscal policy.
A second report yesterday suggested job growth remained modest, with first-time applications for state unemployment benefits rising last week. However, they were in the low end of their range before Superstorm Sandy struck in late October.
Gross Domestic Product expanded at a 3.1% annual rate, the Commerce Department said - a step up from the 2.7% pace it reported last month.
It was the fastest growth since late 2011 and also reflected a slightly better pace of consumer spending than previously estimated. Economists had expected GDP growth would be raised to a 2.8% pace.
In a separate report, the Labour Department said initial claims for jobless benefits increased by 17,000 to 361,000. The data covered the survey period for December nonfarm payrolls.
"The pace of hiring is still disappointing with firms concerned about the impact of the fiscal cliff on demand," said Tanweer Akram, a senior economist at ING Investment Management in Atlanta, adding that the pace of GDP growth in the current quarter "remains quite soft".
The so-called fiscal cliff refers to $600bn (£369bn) in automatic government spending cuts and higher taxes that could be drained from the economy early next year unless an agreement is reached on a less punitive plan to reduce budget deficits.
