The U.S. economy grew faster than initially estimated in the third quarter as businesses aggressively built inventories, but underlying domestic demand remained weak, the government reported Thursday. The Commerce Department said gross domestic product (GDP) grew at a 3.6 percent annual rate, compared to the 2.8 percent pace reported earlier. Economists had expected a smaller upward revision to about 3 percent. The third-quarter growth was the fastest since the first quarter of 2012 and marked an acceleration from the 2.5 percent rate in the April-June period. Businesses accumulated $116.5 billion worth of inventories, the biggest increase in 15 years. In its previous estimate, the department said inventories grew $86 billion. Inventories accounted for a huge 1.68 percentage points of the third-quarter gain, the largest contribution since late 2011. The contribution from inventories previously had been estimated at 0.8 percentage point. Excluding inventories, the U.S. economy grew at a 1.9 percent rate rather than the 2 percent pace estimated last month. A measure of domestic demand rose at a weak 1.8 percent in the third quarter. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was revised down to a 1.4 percent rate, the lowest since late 2009. Consumer spending grew at a 1.8 percent rate in the second quarter. The strong inventory accumulation amid a slowdown in demand means businesses will sell from their inventories rather than ordering more goods, which will limit GDP growth in the current October-December quarter.
