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U.S. economy expands at annual rate of 2.9 pct in Q3

Xinhua, October 28, 2016 Adjust font size:

U.S. economy grew at faster pace in the third quarter of this year, as business inventory investment rebounds offsetting slower consumption growth.

The economy grew at an annual rate of 2.9 percent in the third quarter of this year, beating market expectation of 2.6 percent and higher than the second quarter growth of 1.4 percent, according to data released by the Commerce Department on Friday.

The acceleration reflected an upturn in business inventory investment and acceleration in exports, offsetting a smaller increase in consumer spending and a larger increase in imports, said the Commerce Department.

Consumer spending, which accounts for about 70 percent of the U.S. economy, increased 2.1 percent in the third quarter, lower than the 4.3 percent increase in the previous quarter.

Exports surged 10 percent in the quarter, the fastest quarterly pace since 2013, while imports grew 2.3 percent. Net exports contributed 0.83 percentage points to the economic growth in the quarter, compared to only 0.18 percentage point contribution in the second quarter.

Business inventory investment contributed 0.61 percentage points to the GDP growth in the third quarter, after subtracting from it for the previous five quarters.

Friday's data was in line with the expectations of Federal Reserve policymakers that the economy is expected to grow at a slow and steady pace, according to analysts. Central bank officials might hold that the economy is healthy enough to warrant an interest rate hike this year.

The Fed kept its federal funds rate unchanged in its September meeting amid recent weak economic data and tepid inflation, but strongly signaled that the central bank could have one rate hike by the end of this year.

Analysts widely hold that the Fed would keep interest rate unchanged in its November meeting, while possibly hiking the rate in December. Endi