US economy ekes out 0.4% growth in fourth quarter

The United State Department of Commerce says the country’s economy grew faster than expected to 0.4% in the fourth quarter of 2012.

The annualised figure was better than an earlier estimate of 0.1% growth, reflecting increased investments in plant and equipment.

However, despite the upwards revision, the department warned that the economy remained "sluggish".

The latest figures were a marked slowdown from the previous quarter.

An acute fall in defence spending and government expenditures hurt economic output, said the department.

The October-December figures came amid hopes that the US economic recovery is gathering steam, following a string of recent data showing rising home sales and an improving labour market.

In a report last week, the US Federal Reserve said that the economy had strengthened "moderately" but still needed stimulus measures to underpin recovery.

The Fed has said it would keep its policy of buying $85bn a month of Treasury bonds and mortgage-backed securities in order to lower borrowing costs for households and businesses.

Although US joblessness has fallen, the Fed said it wanted to see signs of a long-term trend of falling unemployment.