Modest expansion for US economy

The US economy has expanded at a modest annual pace of 2.5 percent in the last three months of 2006, due to businesses building up stockpiles of unsold goods.

Economists are divided about whether the build up in inventories is good news or not, as higher stock levels can mean firms are building up supplies in the expectation of better sales, or battling against a backlog of unsold goods.

A pointer to the latter may be that carmakers were one of the main groups building up stocks, and that industry has faced tough times in recent years.

Meanwhile, the housing market continues to weigh on growth, with investment in new home building down by a fifth, while spending on equipment and software fell 5 percent, its sharpest decline since 2002.

For the year, the US economy grew by 3.3 percent.

Economists expect GDP growth to slow to 2 percent in the first three months of this year.

Source: newswire.co.nz