The U.S. economy grew at a faster pace during the third quarter than initially thought, despite the destructive force of hurricanes.

The U.S. Commerce Department said today that gross domestic product grew at a seasonally adjusted annual rate of 4.3% in July through September. That was stronger than the 3.8% rate of growth seen in an earlier estimate of GDP issued a month ago, and was the best showing since an identical 4.3% gain in the first quarter of 2004.

Growth was supported by strong spending by both consumers and businesses. Consumer spending, which accounts for more than two thirds of economic activity, climbed 4.2%, up from a previously reported 3.9% and above the second quarter’s 3.4% advance. Purchases of durable goods increased 10.5% and nondurables purchases rose 3.6%. Business spending rose 8.8%, above the earlier estimated 6.2% increase and matching the second-quarter’s increase. Spending by businesses on equipment and software rose 10.8%.

Corporate profits after taxes fell by 3.7% to US$938.5 billion — the sharpest decrease since profits dropped 8.5% in the third quarter of 2001. Earnings rose 5.3% in the second quarter of this year. Year over year, profits climbed 9.4% as compared to the third quarter of 2004.

Inflation gauges were revised slightly lower. The government’s price index for personal consumption rose 3.6%, down from the previous estimate for the quarter of 3.7% but above the second quarter’s 3.3% climb.

The chain-weighted GDP price index increased at a 3% rate, down from the previous estimate of 3.1% but higher than the second quarter’s 2.6% climb.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, rose at a 4.0% rate, unrevised from the previous estimate and above the second-quarter rate of 3.3%.

The U.S. trade imbalance weighed on the economy.

In other economic news, the Purchasing Management Association of Chicago said its index of area business activity fell to 61.7 in November on a seasonally adjusted basis from 62.9 in October. A reading above 50 indicates expansion in the manufacturing sector and a reading below 50 indicates a contraction.

The Chicago survey is watched closely for clues to the index of the Institute for Supply Management. The ISM November survey will be released Thursday morning.