U.S. economic growth braked sharply in the third quarter as businesses cut back on restocking warehouses to work off an inventory glut, but solid domestic demand could encourage the Federal Reserve to raise interest rates in December.
Gross domestic product increased at a 1.5 percent annual rate after expanding at a 3.9 percent clip in the second quarter, the Commerce Department said on Thursday.
"The guts of the report were healthy, they still show strong underlying momentum in the economy and that puts a December rate hike firmly on the table," said Thomas Costerg, a U.S. economist at Standard Chartered Bank in New York.
"That inventory drawdown represents a bit of a healthy purge that should set the economy up for stronger growth in the coming quarters," said Jim Baird, chief investment officer for Plante Moran Financial Advisors in Kalamazoo, Michigan.