The U.S. economy was much stronger in the spring than first thought because of better exports and less inventory liquidation by businesses, according to a government report released today.

Gross domestic product rose at a seasonally adjusted 3.3% annual rate April through June, the U.S. Commerce Department said, in a revised estimate of second-quarter GDP.

Originally, the government had estimated second-quarter 2008 GDP climbed 1.9%.

The adjustment to second-quarter GDP surprised Wall Street. Economists had estimated a 2.7% increase.

The report showed businesses drew down inventories in the second quarter less than first thought, lowering stocks by US$49.4 billion. Originally, Commerce estimated a US$62.2 billion decrease.

Net exports in the second quarter were stronger than first believed, another reason for the large upward revision to GDP. Exports rose 13.2% instead of 9.2% as reported originally. Imports fell 7.6% instead of 6.6% as first reported.

Second-quarter spending by consumers climbed 1.7%, up from a previously reported 1.5% increase and above the first quarter’s 0.9% gain.

As for revisions to inflation gauges within the report, the government’s price index for personal consumption increased an unrevised 4.2%, above the first quarter’s 3.6% increase. The PCE price gauge excluding food and energy increased an unrevised 2.1%, above the first quarter’s 2.3% increase.

Meanwhile, initial claims for unemployment benefits fell 10,000 to 425,000 after seasonal adjustments in the week ended Aug. 23, the U.S. Labor Department said today. The previous week’s level was revised up slightly.

Economists expected a 12,000 decline.

The four-week average — which attempts to smooth out weekly volatility — fell by 6,000 to 440,250.