Official figures show that the US economy grew more quickly than initially thought in the fourth quarter of last year. The improvement came as businesses drew down inventories at a much slower pace and boosted investment.
In its second reading of fourth-quarter gross domestic product, the Commerce Department said the economy grew at a 5.9% annual rate, rather than the 5.7% it estimated last month.
It was still the fastest pace since the third quarter of 2003 and compared with a 2.2% rate in Q3.
While the economy rebounded strongly in the second half of 2009 from the worst downturn since the 1930s, data so far suggest the rapid rate of acceleration slowed somewhat in the first quarter of 2010.
A sharp slowdown in the pace at which businesses liquidated inventories combined with increased spending on equipment and software to boost growth in the fourth quarter, offsetting weak consumer spending and residential investment.
Stripping out inventories, the economy expanded at an annual rate of 1.9%, rather than the 2.2% pace estimated last month, indicating that growth was not being driven by demand. The change in inventories alone added 3.88 percentage points to GDP in the last quarter.
For the whole of 2009, the US economy shrank by 2.4%, the biggest decline since 1946, the department said.
In the final three months of 2009, consumer spending increased at a 1.7% rate, rather than the 2% pace reported in January. That was below the 2.8% rate in Q3.
The department confirmed robust spending on equipment and software caused business investment to grow for the first time since second quarter of 2008, despite a drop in spending on commercial property. Business investment rose at a 6.5% rate, much faster than the 2.9% estimated last month.
Spending on new home construction grew at a slower 5% rate in the fourth quarter, instead of 5.7% estimated last month. It had grown by 18.9% in the third quarter.
More worries for US housing sector
Separate figures showed that US existing home sales fell to their lowest level in seven months in January, highlighting ongoing worries for the sector.
Industry body the National Association of Realtors (NAR) said sales of single-family and townhomes and apartment dropped 7.2% to a seasonally adjusted annual rate of 5.05 million units in the first month of the year.
It was the lowest reading since June last year as buyers took a breather from a first-time homebuyer tax credit provided by the US government. Most analysts had expected around 5.5 million units.
The January sales were, however, 11.5% above the 4.53 million level in the same month in 2009.
