Washington, October 29--Gross domestic product increased at a 3.7% annual rate, the Commerce Department said Friday in its first of three readings on third-quarter growth.
That topped the 3.3% rate recorded in the final second-quarter reading but fell well short of the 4.3% economists had expected, according to a survey by Dow Jones Newswires and CNBC.
Consumer spending, which accounts for about two-thirds of economic activity, rose 4.6% during the third quarter, up from the 1.6% gain in the previous period.
Purchases of durable goods, items meant to last three years or more, expanded a blistering 16.8%, in contrast to the 0.3% contraction in the second quarter.
Spending on nondurable goods rose 3.9%, up from 0.1% in the prior quarter. Business investment rose 8.5% in the third quarter, after rising 13.9% in the second. Investment in commercial buildings went up 11.7%, after increasing 12.5% in the second quarter. Spending on equipment and software rose 14.9%, after a 14.2% gain in the previous period.
Businesses reduced inventories by $13 billion during the third quarter, following a $21.1 billion increase in the second quarter. The change in inventories subtracted 0.48 of a percentage point from GDP growth.
Real final sales of domestic product -- that is, GDP less the change in private inventories -- advanced at a 4.2% annual rate. Second-quarter real final sales climbed at a 2.5% annual rate.
Exports rose by 5.1%, while imports -- a subtraction from GDP -- advanced by 7.7%. Imports cut GDP growth by 1.13 percentage point, Commerce said.
Federal government spending went up 4.6% in the third quarter, compared with a 2.7% climb in the second. State and local government spending fell 0.5%.
