US rebound loses its momentum

Consumer spending was blamed for the slowdown

The once-sizzling pace of US economic growth has eased sharply, according to the latest set of official figures.

Output grew at an annual rate of 4% during the last three months of 2003, less than half the 8.2% achieved in the previous quarter.

Analysts, who were taken aback by the scale of the deceleration, pinned the blame on slowing consumer spending - the US's main economic driver.

The slowdown could make an early rise in interest rates less likely.

Spending slows

The 4% figure was lower than analysts' growth forecasts of about 4.8%.

Lara Rhame, senior economist at Brown Brothers Harriman & Co, said: "Four percent is going to feel like a disappointment compared to the consensus and compared to Q3 but it is still a very respectful rate of growth and details show that the recovery is well on track."

Consumers, whose spending accounts for two-thirds of US economic activity, were blamed for the end-of-year slowdown.

Spending growth slipping to 2.6% in the final three months of the year from 6.9% in the July to September period.

Over the year as a whole, the Commerce Department said the US economy grew by 3.1% - its best performance since 2000.

Export boon

However, the dollar's recent weakness proved to be a boon for exporters, helping to make US goods more competitively priced overseas.

Exports surged 19.1% from October to December, almost double the 9.9% increase seen in the previous three months.

Meanwhile, separate figures showed that US consumer sentiment remained upbeat in January thanks to better job prospects, lower interest rates and a robust stock market.

The University of Michigan's gauge of consumer confidence rose to a final reading of 103.8 in January, from December's figure of 92.6.