The U.S. economy grew at a 4.4% annual rate in the first quarter of 2004, slightly faster than previously thought.

The Commerce Department said gross domestic product increased from January through March at a 4.4% annual rate, better than the 4.2% pace originally projected. Economists had forecast revised growth of 4.5%.

Sharply higher inventory rebuilding was a primary reason for the modest upward revision, the government said. Businesses increased inventories by US$28.2 billion, way up from an originally estimated US$15.3 billion boost. That added three-quarters of a percentage point to the overall growth rate. But overall business spending advanced by 5.8%, revised down from a previously estimated 7.2% increase.

Corporate after-tax earnings increased 1.4% from the previous three months, an initial estimate in the report showed. Though markedly lower than fourth-quarter profit growth of 7.6%, first-quarter profits were up 36.7% from last year.

GDP grew at a 4.1% annual rate in the final quarter of 2003 and a 3.1% rate for the full year. It advanced 2.2% in 2002 and 0.5% in 2001.

Spending by consumers, which accounts for about two-thirds of U.S. economic activity, rose at a 3.9% annual rate in the first quarter. That was slightly stronger than previously estimated and up from a 3.2% growth rate in the fourth quarter.

Exports increased 4.9% in the first quarter, while imports advanced by 5.9%.

In a separate release, the U.S. Labor Department reported that initial jobless claims fell by 3,000 to a seasonally adjusted level of 344,000 last week. Though that marked the first decline in three weeks, the four-week average climbed by 1,500 to 335,500. Claims for the week of May 15 were revised upward by 2,000 to 347,000.