Spending by consumers continued to push the U.S. economy forward in the third quarter. However, corporate profits fell companies faced higher costs.

The Commerce Department said today that gross domestic product increased at a 3.9% annual rate, faster than the 3.7% pace initially estimated for the July through September period.

GDP grew 3.3% in the second quarter and 4.5% in the first. The economy advanced 3% in all of 2003.

Consumer spending, which accounts for roughly two-thirds of U.S. economic activity, climbed 5.1%, up from the 4.6% pace previously reported and higher than the second quarter’s 1.6% gain. Purchases of durable goods increased 17.2% and non-durables rose 4.8%; those categories were previously seen as rising 16.8% and 3.9% respectively.

However a separate report from the U.S. Conference Board released today showed consumer spending may slow in the fourth quarter. The Conference Board reported that its November consumer-confidence index slipped to a reading of 90.5, down from 92.9 in October.

While consumers’ assessment of present economic conditions improved slightly, expectations of economic health six months from now fell to 87.4 from 92.2 in October.

The Commerce Department said business spending on equipment and software, meanwhile, grew at a sizable 17.2% annual rate in the third quarter, better than the 14.9% growth rate previously estimated for the period and up from the second quarter’s 14.2% pace. Overall business spending rose 12.9%, up from the initially estimated 11.7% increase.

Exports rose by 6.3% while imports increased by 6.0%.

However, corporate earnings in the quarter slumped, as energy costs rose, productivity slumped and a series of hurricanes battered the Southeastern U.S.. After-tax profits decreased 2% to $884.9 billion in July though September after slipping 0.7% in the second quarter. Nonetheless, profits were still 8.1% higher than a year ago.

At the same time, inventory investment by private companies was weaker than first believed. Businesses expanded their stocks by $35.9 billion, down sharply from the originally reported $48.1 billion and much lower than the $61.1 billion increase in stockpiles in the second quarter.