New figures have confirmed that the US economy surged out of recession during the first three months of the year.

US economic growth

Q1 2001 +1.3% Q2 2001 +0.3% Q3 2001 -1.3% Q4 2002 +1.4% Q1 2002 +5.6%

Data from the US Commerce Department showed that the economy grew by an annual rate of 5.6% in the first quarter - its fastest pace for nearly two years.

This was slightly below the Commerce Department's previous estimate of 5.8%.

And the figure came in below expectations, with most analysts predicting growth of about 6%.

Business investment lags

Much of the economic expansion is thought to have stemmed from the depletion of unsold stocks built up during last year's downturn, with many manufacturing companies placing fresh orders for raw materials.

An increase in military spending linked to the US campaign in Afghanistan, and hefty tax cuts pushed through by the US government last year, have also been cited as a factors.

The downwards revision of last month's initial estimate partly reflects slower growth in consumer spending, and weaker investment by businesses.

US business investment, seen as a key measure of corporate confidence, has now declined for five consecutive quarters, prompting doubts over the strength of the economic rebound.

Turnaround?

But the latest growth figure is still sharply higher than the 1.4% growth recorded during the final three months of 2001.

The 5.6% expansion marked the US economy's fastest quarterly growth rate since the spring of 2000.

During last year's downturn, the world's biggest economy dipped only briefly into negative territory, contracting by an estimated 1.3% between July and September 2001.

Most economists expect growth to slow to a more moderate 3.5% during the April to June period this year.

The encouraging data failed to buoy the stock market, with the benchmark Dow Jones index falling 8.52 points to 10,209.43 shortly after the open on Friday.