U.S. economic growth was revised modestly higher in the first quarter to account for a slightly faster pace of restocking by businesses and a smaller increase in imports, government data showed on Friday, but remained anemic.
Gross domestic product growth rose at annual rate of 1.9 per cent, the Commerce Department said in its final estimate, up from the previously estimated 1.8 per cent. The revision was in line with economists' expectations.
The economy expanded at a 3.1 per cent rate in the fourth quarter.
Growth has remained tepid so far in the second quarter, but both economists and the Federal Reserve are cautiously hopeful that activity will pick-up in the third quarter.
First-quarter growth was supported by stronger than previously estimated accumulation of business inventories, slower imports and a smaller decline in residential construction, while the increase in business spending was revised lower.
Business inventories increased $55.7-billion (U.S.), above last month's $52.2-billion estimate. The change in inventories added 1.31 per centage points to GDP growth.
Business investment rose at a 2.0 per cent rate instead of 3.4 per cent as outlays on equipment and software were not as strong as previously estimated.
Consumer spending -- which accounts for more than two-thirds of U.S. economic activity -- grew at an unrevised 2.2 per cent rate.
Imports were revised down to a 5.1 per cent growth pace from 7.5 per cent. Even though exports were not as strong as previously reported, trade made a modest contribution to growth in the first quarter. Government spending contracted at a much sharper 5.8 per cent rate rather than 5.1 per cent, with defense outlays dropping at a revised 11.8 per cent rate.
The report also showed that after-tax corporate profits were revised to an increase of 1.2 per cent instead of a 0.9 per cent drop. Economists had expected corporate profits to be revised to show a decline of 0.8 per cent.
It also showed inflation pressures a little bit stronger, with the personal consumption expenditures price index revised to up 3.9 per cent rate from 3.8 per cent increase. That compared to the fourth quarter's 1.7 per cent increase.
The core PCE index closely watched by the Fed advanced at a 1.6 per cent rate, the highest since the fourth quarter of 2009, rather than 1.4 per cent reported last month. Fed officials would like to see this measure close to 2 per cent.