US economic growth was robust in the third quarter, according to the first government estimate Thursday, appearing to underscore the Federal Reserve''s decision to end its asset-buying stimulus program. The world''s largest economy expanded at an annual rate of 3.5 percent in the July-September period as defence spending surged and exports climbed, narrowing the trade gap, the Commerce Department said.
Economists had expected slower third-quarter growth, with the consensus at 3.0 percent, after the robust 4.6 percent expansion in the second quarter. The economy contracted 2.1 percent in the first quarter largely due to severe winter weather.
"Growth above three percent in four of the past five quarters is starting to look like a trend," said Ian Shepherdson of Pantheon Macroeconomics.
The GDP report came a day after the Federal Reserve announced it was winding up its asset-purchase program this month, after pumping trillions of dollars into the economy in the past six years to shore up the recovery from the Great Recession.
In announcing its decision Wednesday, the Federal Open Market Committee expressed increasing confidence in a modestly expanding economy and cited "substantial improvement" in the labour market, where the unemployment rate has fallen to 5.9 percent and jobs growth has averaged 227,000 a month so far this year.
Data released by the Labor Department on Thursday showed new claims for unemployment insurance, a sign of the pace of layoffs, were holding to the recent low levels that have bolstered the tightening jobs market.
The healthy GDP numbers fuelled speculation that the central bank could hike interest rates earlier than the mid-2015 target that it has signalled up to now.
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