WASHINGTON (Reuters) - U.S. economic growth for the fourth quarter is likely to be revised higher after data on Thursday indicated more spending on services than previously estimated by the government.
The Commerce Department’s quarterly services survey, or QSS, added to December data on construction spending and manufacturers inventories in suggesting that gross domestic product grew much faster than the 2.5 percent annualized rate reported by the government in its second estimate last month.
Before the QSS data, economists had expected that GDP growth for the October-December quarter would be raised to about a 2.6 percent rate. Some now expect fourth-quarter GDP growth would be revised up to a 2.9 percent rate when the Commerce Department’s statistics agency, the Bureau of Economic Analysis, incorporates the data into its third estimate to be published later this month.
“The QSS points to stronger services spending in the fourth quarter than the BEA had previously estimated,” said Daniel Silver, an economist at JPMorgan in New York.
“And while the QSS often impacts health care categories within the spending data, we think that much of the expected fourth-quarter upward revision will be related to spending on motor vehicle maintenance and repair.”
Silver also said the QSS data pointed to a modest downward revision to investment in intellectual property products.
Spending on intellectual property products was previously reported to have increased at a 2.4 percent rate in the fourth quarter.
Reporting By Lucia Mutikani; Editing by Bernadette Baum