US growth in the last quarter of
2105 was higher than first thought, according to the latest figures from
the Commerce Department.
The US economy grew at an annualised pace of 1% in the quarter, compared with an initial estimate of 0.7%.
Most economists had taken a more pessimistic view, expecting the figure would be revised downwards.
But businesses bought more stock than previously estimated, which meant inventory levels were $13bn higher.
The
downside is that next month's growth figures may be lower than expected
if businesses do get round to cutting back on inventory spending.
Some forecasts put the growth rate for the first three months of 2016 as high as 2.5%.
But Chris Williamson,
chief economist at research firm Markit, said: "Unfortunately, the
cause of the upward revision bodes ill for the first quarter.
"The
GDP number was revised higher in part due to a bigger than previously
thought contribution from inventories, something which often happens due
to weaker than expected demand, meaning inventories could act as a drag
in the first quarter as excess stocks levels are wound down again."
Uncertainty
Consumer
spending, which accounts for more than two-thirds of US economic
activity, rose at a 2% pace in the fourth quarter, rather than the 2.2%
rate previously estimated.
Cheap oil and lower heating bills from a mild winter has helped consumer confidence.
But some economists fear that the slowdown in consumer spending could get worse.
Mr
Williamson said: "Companies cite a number of worries that are dragging
on customer spending and causing business to become more risk averse.
"These
include uncertainty about the forthcoming election, financial market
volatility, the global economic environment and the possibility of
higher interest rates."
The chair of the US central bank, the
Federal Reserve, Janet Yellen has indicated that rates could rise
gradually through the year if the economy grows strongly enough.
Lower oil prices have also been a drag on the profits of oil companies and a range of oil support industries, leading them to cut spending on investment.
A Reuters survey this month estimated that the top 30 global oil companies had cut their budgets by an average of 40%.
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