US economy grew faster than thought in fourth quarter

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The US economy grew at a 3 per cent annual rate in the last three months of 2011, faster than the 2.8 per cent initially thought, the Commerce Department said on Wednesday.

The second of the department's three estimates of fourth-quarter gross domestic product beat analysts' expectations.

Even with the boost to the October-December number, GDP growth for all of last year was still only 1.7 per cent, down from 3 per cent in 2010.

Inventory-building by companies that expect an expansion in demand was a major factor in the fourth quarter, the Commerce Department said, while the quarterly gain in consumer spending was revised upward to 2.1 per cent, reflecting advances in employment.

Personal income, adjusted for inflation, rose at an annualised rate of 1.4 per cent in the fourth quarter, compared with the initial estimate of 0.8 per cent.

The Commerce Department also amended its earlier take on personal income in the third quarter of 2011, from a decline of 1.9 per cent to an increase of 0.7 per cent.

US unemployment dropped 0.2 per cent in January to 8.3 per cent - its lowest level since February 2009 - as the economy created 243,000 net new jobs.

Employers added an average of 201,000 new jobs per month in November-January.

The recession that began in December 2007 and officially ended in June 2009 destroyed 8.4 million jobs in the US.