US economic growth revised upward sharply

The US economy grew much more strongly in the third quarter than originally estimated, according to the US Bureau of Economic Analysis (BEA).

The BEA today revised the annualised growth in US GDP in the third quarter of 2013 from its initial estimate of 2.8 per cent to 3.6 per cent.

The BEA said that the big change from its initial GDP estimate was a bigger increase in “private inventory investment”, which refers to companies producing more than they sell,

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Economists view this as a form of spending when companies do it deliberately, stockpiling goods in anticipation of increased sales.

The positive economic news will likely add to expectations that the US Federal Reserve will start reducing its bond buying programme soon by ‘tapering’, and markets have slightly sold off since the news.

Investors will now look ahead to US jobs data tomorrow, where if the data is better than expected, it will likely add to fears of imminent ‘tapering’.

Elsewhere, both the Bank of England and the European Central Banks kept their base interest rates at record lows, at 0.5 per cent and 0.25 per cent respectively.