US economy grows at fastest pace since 2003

<p>Growth in the world’s first economy has beat expectations.</p>

The US economy grew at an annual rate of five per cent in the third quarter of this year, its fastest pace since 2003, official figures released today (December 23rd) show. This exceeded the previous forecast of 3.9 per cent 

The US Commerce Department said the results are due to strong consumer and business spending. That was up from the second quarter’s growth rate of 4.6 per cent and the strongest pace since the third quarter of 2003.

Consumer spending grew at an annual pace of 3.2 per cent, the fastest since the fourth quarter of 2013. Growth in business investment was raised to a rate of 8.9 per cent pace from an earlier estimate of 7.1 per cent.

After two strong quarters for the US economy, economists predict that growth will slow to an annual rate of around 2.5 per cent in the current October-December quarter, the BBC reports. But they predict growth of about three per cent in 2015.

The Commerce Department has also revised upward its estimate of corporate profits last quarter. They rose 2.8 per cent from the second quarter, versus an earlier estimate of 1.7 per cent growth.

Fed chair Janet Yellen said yesterday the central bank is unlikely to raise rates before the end of April 2015.

Tumbling oil prices, along with the economic woes of the eurozone, Japan, China and Russia did not change the Fed's plan of action, which focused instead on upbeat US data.

US employers added 321,000 jobs in November, a figure that is well above analysts' forecast of around 225,000 new jobs.

The Labor Department says the unemployment rate remained at a six-year low of 5.8 per cent. Job gains have averaged 241,000 a month this year, putting 2014 on track to be the strongest year for hiring since 1999. 

In addition,the Conference Board Leading Economic Index (LEI), an index of US leading indicators, increased by 0.9 per cent in October, following a 0.7 per cent increase in September - beating forecasts.

US stocks rose a fifth day today after the announcement. The Standard & Poor’s 500 climbed 0.4 per cent at 09:30 ET in New York, while the Dow average added 46.72 points to 18,006.16. 

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