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WASHINGTON - The United States economy grew at a revised 0.9 per cent annual rate in the first quarter, slightly better than previously thought because of lower demand for foreign goods and services and a pickup in non-residential building, the Commerce Department reported yesterday.

Growth in the January-March quarter was in line with economists’ expectations. The economy grew at a 0.6 per cent rate in the fourth quarter of last year.

‘The underlying domestic demand in the economy showed a slight improvement. It’s probably consistent with the Fed being on hold in June and several months after that,’ said Mr Nick Bennenbroek, a currency strategist with Wells Fargo in New York.

The upward revision to first-quarter growth and the inflation readings in the quarter are likely to provide some comfort to the Federal Reserve. The central bank has become increasingly concerned about rising prices amid slowing growth and has signalled that it may pause a string of interest rate cuts.

The Labour Department also reported that claims for new jobless benefits rose slightly more than expected last week, while the tally of those still drawing benefits hit its highest mark in more than four years. Initial claims for state unemployment insurance benefits rose to 372,000 last week from an upwardly revised 368,000 for the prior week.

The Commerce Department said imports of goods and services fell 2.6 per cent in the first quarter. But exports, a recent source of strength for the economy, also were weaker than first thought, with the first-quarter figure revised to an increase of 2.8 per cent from a 5.5 per cent rise.

The Dow Jones Industrial Average rose 3.74 points, or 0.03 per cent, to 12,597.77 in early trading. - REUTERS
 
Source : Straits Times - 30 May 2008