US GDP expanded at 3.5% clip in the third quarter

US gross domestic product (GDP) expanded at 3.5% clip in the third quarter, in seasonally adjusted and annualised terms, according to an advanced estimate from the Bureau of Economic Analysis.

The consensus estimate had been for a rise of 3%.

That followed a 4.6% rise over the previous three months. Combined with the first quarter they are the strongest back-to-back increases since the second half of 2003.

Consumer spending grew at a 1.8% clip, slightly less than the 2% gain which had been expected.

Government outlays were up by 4.6%, the most since the second quarter of 2009, thanks to increased defence spending. At the federal level expenditures rose by 10%. That provided the overall rate of GDP expansion with a boost of 0.8 percentage points.

A slower pace of growth in company stockpiles subtracted 0.6 percentage points from the economy’s rate of expansion.

Fixed investment grew by 4.7%.

Net trade contributed 1.3 percentage points to GDP growth in the third quarter as the external trade deficit narrowed to $409.9bn from $460.4bn on the heels of lower imports.

The personal rate of saving stood at 5.5%, its highest in almost two years.