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Defence boosts US growth

A smaller trade deficit and a surge in defence spending buoyed US economic growth in the third quarter, but other details of yesterday's growth report hinted at some loss of momentum in activity.

Gross domestic product grew at a 3.5pc annual rate, the Commerce Department said, beating economists' expectations for a 3pc pace.

But the pace of growth in business investment, housing and consumer spending slowed from the second quarter.

"The report was broadly constructive, with the gains pointing to positive underlying momentum in the US economy," said Millan Mulraine, deputy chief economist at TD Securities in New York. It was the fourth quarter out of five that the US economy has expanded.