US third-quarter GDP beats expectations

The US economy grew more than initially estimated in the third quarter, marking its strongest quarterly pace of growth in two years, according to data released by the Commerce Department on Thursday.

Gross domestic product grew at an annual rate of 3.5%, up from an earlier estimate of 3.2% and compared to 1.4% growth in the second quarter. Economists had been expecting GDP to be revised up to 3.3%.

Consumer spending – which makes up more than two-thirds of economic activity – rose at an annual rate of 3%, up from the previous estimate of 2.8%, while business investment was up 1.4% compared to the prior estimate of a 0.1% increase.

Non-residential spending grew at a 12% rate, which was the fastest pace since the first quarter of 2014.

Naeem Aslam, chief market analyst at Think Markets, said: “The US final GDP revision data was much better than expected. This certainly provides some ammunition for the Dow to have another go at the 20K mark.

“The reality is that the US economy has performed much better and it is on solid footing, but the Fed may not celebrate this news too much. The reason is that they certainly do not want the market to think that the Fed will be very aggressive in hiking the rate as that would create serious issues in emerging markets due to the dollar strength.”

Dennis de Jong, managing director at UFX.com, said: “The relative boom of the US economy shows no signs of slowing down with another strong set of GDP figures released today.

“Fed Chair Janet Yellen has already stated that another round of rate rises are on top of her to-do list for 2017. She’ll want to ensure that the solid growth shown in Q4 continues into the new year, and well into the President Donald Trump era.”