US GDP up more than expected in last quarter
The US economy grew more than previously estimated in the second quarter on bigger gains in consumer and business spending that show expansion is back on track.
However, a surge in inventories also signals such strong growth will be difficult to sustain in the short run.
Gross domestic product rose at a 3.7pc annualised rate, exceeding all estimates of economists surveyed by Bloomberg and up from the 2.3pc the Commerce Department reported last month, new figures showed.
American households, bolstered by gains in employment, rising home prices and cheaper fuel costs, will probably continue to spur the economy in the second half of the year.
But a record surge in stockpiles represents another headwind for manufacturers already contending with a rising dollar and slumping emerging markets that have hurt exports.
"The economy was on a firm footing coming into the second half," Millan Mulraine, deputy head of research and strategy at TD Securities in New York, said before the report. "The outlook going forward has more to do with global markets."
The report comes as Federal Reserve policymakers debate whether growth is strong enough to withstand the first increase in the benchmark interest rate since 2006.
While the job market has made strides since the recession ended, inflation remains well short of the central bank's goal. Additionally, the global plunge in stocks could argue for a delay.
Meanwhile, a report yesterday from the Labor Department showed fewer Americans applied for unemployment insurance benefits last week.
Jobless claims declined by 6,000 to 271,000 in the week ended August 22. That's just above a four-decade low of 255,000 reached in mid-July.
The latest GDP estimate is the second of three for the quarter, with the third release scheduled for late September. The economy grew at a 0.6pc pace from January through March, restrained by harsh winter weather, a labour dispute at west coast ports and a slump in energy-industry investment after oil prices dropped. (Bloomberg)