US economic growth was far stronger than initially thought in the third quarter, pointing to strengthening fundamentals that should support the economy for the rest of the year.

The Commerce Department today raised its estimate of gross domestic product to a 3.9 per cent annual pace from the 3.5 per cent rate reported last month, reflecting upward revisions to business and consumer spending, as well as restocking.

Spending on residential construction also was raised, helping to offset downward revisions to export growth and government spending. Economists had expected growth would be trimmed to a 3.3 per cent pace. “This report will go some way in providing further confirmation about the sustainability of the current economic recovery,” said Millan Mulraine, deputy chief economist at TD Securities in New York.

The economy had expanded at a 4.6 per cent rate in the second quarter. It has now experienced the two strongest back-to-back quarters of growth since the second half of 2003. When measured from the income side, the economy grew at its fastest pace since the first quarter of 2012. U.S. stock futures edged up and the dollar rose to session highs against the euro after the data. Prices for US Treasuries erased slight gains.

Reuters