GDP an annual rate of 2.8 percent in third quarter

WASHINGTON, Nov. 7 (UPI) -- The U.S. economy grew at an annual rate of 2.8 percent in the third quarter of 2013, the Commerce Department said Thursday, in the first of three estimates.

Although the figure is scheduled for two revisions that could move it up or down, the pace of growth was pegged in the current report as faster than the first and second quarter, which notched growth at 1.1 percent and 2.5 percent, respectively.

In the third quarter, growth came from businesses spending to increase inventories, exports and residential housing. Local and state governments also increased spending and imports, which subtract from the GDP, the department said.

Consumer spending climbed, but at a pace of 1.5 percent, the slowest increase since the first quarter of 2009. It also follows the increase of 1.8 percent in the second quarter, which was considered weak, as well.

Durable goods rose 7.8 percent after rising 4.7 percent in the second quarter. Non-durable goods rose 2.7 percent, following a 1.6 percent increase in the second quarter.

Despite relatively slow spending by consumers, businesses built up inventories by $86 billion in the quarter compared to $56.6 billion in the second and $42 .2 billion in the first.

Gross investment dropped 1.7 percent after rising 1.6 percent in the second quarter, a sign that, building up inventories aside businesses were not spending to expand, which is considered a prerequisite for adding jobs.

The price index for domestic purchases, rose 1.8 percent in the quarter after rising just 0.2 percent in the second. Core prices, which excludes food and energy, rose 1.5 percent in the third quarter, after rising 0.8 percent in the second, the Bureau of Economic Analysis said.