The US economy grew at an annualized rate of 3.3 per cent in the second quarter - faster than previously estimated by the government and a stronger upward revision compared with economists’ forecasts.

A combination of surging exports, declining imports, improved consumer spending figures and a less aggressive drawdown in business inventories helped drive up the growth rate figure from its base of 0.9 per cent in the first quarter.

In late July, the US government had estimated that gross domestic product had risen at an annualised rate of 1.9 per cent in the second quarter. Economists were expecting that rate to rise to 2.7 per cent on Thursday.

The upward revision offers evidence of a healthier US economy than was previously imagined.

US growth was not only the strongest in the G7 but it was above the economy’s potential rate of 2.5 per cent to 3 per cent.

While this is a positive short-term gain, it may lead to a reduced growth rate in the second quarter.

Exports grew at an annual pace of 13.2 per cent - significantly faster than the 9.2 per cent reported during the first GDP estimate – while imports also declined more steeply than was previously thought.

Consumer spending grew at a pace of 1.7 per cent, slightly above the earlier estimate of 1.5 per cent growth.

On the negative side, the contraction in the residential real estate market was more rapid than previously estimated. Housing activity declined at a pace of 15.7 per cent.

Source: Financial Times Limited