US third-quarter GDP growth revised up to 2.1pc

Washington: The US economy grew faster than originally reported in the July-September period, expanding at a 2.1 percent annual rate, the Commerce Department said Wednesday.

Higher exports and residential investment helped boost growth from the 1.9 percent estimated last month, according to the more complete data on the third quarter. Business investment, which has been hit hard by President Donald Trump´s trade war with China, also helped in a way, declining by less than originally reported, dropping 2.7 percent rather than 3 percent in the first estimate.

The consensus among economists predicted no revision to the GDP result, but some correctly forecast the upward revision which puts the third quarter on track to best the 2 percent growth in the second quarter, after the 3.1 percent expansion in the first three months of the year.

Consumption, the traditional driver of growth, accounting for 70 percent of US GDP, remained strong, advancing by 2.9 percent, with a strong rise in spending on durable goods such as cars or appliances, according to the data.

Investment in real estate market jumped 5.1 percent, the strongest in two years, boosted by low interest rates.

At the height of the trade war, exports, which fell 5.7 percent in the second quarter, recovered slightly in the latest quarter, rising 0.9 percent -- two-tenths stronger than originally reported. Imports also were stronger than previously estimated, rising by 0.8 percent.

These positive revisions were offset by a downward revision of government spending which gained 1.6 percent instead of 2 percent in the first estimate. Without the volatile transportation sector, order also rose by 0.6 percent.

Meanwhile, a closely-watched government inflation gauge confirmed that US price pressures remain tame in October, for now easing any concerns about the Federal Reserve´s round of interest rate cuts.

The so-called PCE price index -- the Fed´s preferred measure -- showed annual inflation remained a low 1.3 percent in October, the same as in September, according to the Commerce Department report.

Excluding volatile food and energy prices, the "core" PCE inflation index slowed slightly to 1.6 percent from 1.7 percent in the prior month, retreating back to its July level.

Goods prices fell 0.6 percent compared to October 2018, while energy prices dropped 4.2 percent, according to the report. Services, however, which make up the biggest part of the US economy, increased 2.2 percent.