The US economy grew a bit more quickly in the first quarter than first estimated as businesses scrambled to restock, while a revival in corporate profits slowed, the government said on Thursday.
US gross domestic product - which measures total output within the nation's borders - expanded at a revised 4.4 percent annual rate, the Commerce Department said.
The revised growth figure, just shy of the Wall Street consensus forecast, was only slightly above the 4.2 percent gain seen in the initial first-quarter snapshot a month ago.
A separate report from the Labour Department showed the number of Americans filing first-time claims for jobless aid fell less than expected last week, but a rolling average stayed close to a 3-1/2 year low, reflecting a recovering job market.
US bond prices rose after the data as a downward revision in a key price gauge in the GDP report eased the fears of some investors the Federal Reserve might need to raise interest rates aggressively to choke off inflation.
Investors in US stock markets pushed prices higher on welcome corporate news and relief over a drop in oil prices, and a broad sell-off of the dollar continued.
While the GDP report confirmed an acceleration in inflation evident in the first report last month, the Commerce Department scaled back some closely watched price measures.
The core price index for consumer spending - a favourite of Federal Reserve Chairman Alan Greenspan that cuts out volatile food and energy prices - gained at an annual rate of 1.7 percent, slower than the originally reported 2.0 percent pace but still well ahead of its fourth-quarter pace.
Many economists remain convinced the Fed will raise interest rates at its next meeting at the end of June to head off inflation pressures.
"These are numbers that confirm what we suspected a month ago - that the Fed is poised to raise interest rates," said Gary Thayer, chief economist at A.G. Edwards & Sons in St. Louis.
The latest GDP report showed after-tax corporate profits rose a tepid 1.4 percent in the January-March period, compared with the fourth quarter. It was the weakest quarterly profit performance since an earnings drop at the start of last year.
Still, over the past four quarters, after-tax profits have surged 36.7 percent, the strongest gain in over 22 years.
Separately, the Labour Department said first-time claims for state unemployment benefits fell 3,000 to 344,000 in the week ended May 22. Analysts had forecast a fall in claims to 335,000 from the 345,000 first reported for the previous week.
While initial claims fell, the four-week moving average of filings - which smooths out weekly fluctuations for a better picture of underlying trends - climbed by 1,500 to 335,500, an uptick from the prior-week level, which was the lowest since September 2000.
In general, the claims numbers complement the country's increasingly encouraging jobs picture. In April, US employers added 288,000 workers to their payrolls on the back of a hefty 337,000-job gain in March.
The Conference Board, a private research group based in New York, said its gauge of help-wanted ad volume in US newspapers fell in April to 38 from 39 the prior month, suggesting some slowdown in hiring. "No one expects the economy to continue delivering over a half-million new jobs every two months," Conference Board economist Ken Goldstein said.
May's employment report, due on June 4, is forecast to show the economy churned out a more moderate, but still-solid 225,000 new jobs.
The pickup in employment, coupled with signs of budding inflation, have convinced financial markets the Fed is on the verge of raising overnight interest rates from their current 1958 low of 1 percent.
Over the last four quarters, US GDP has risen 5 percent - the strongest advance since 1984.
A faster pace of inventory building was a big factor behind the upward revision to first-quarter GDP, with restocking adding three-quarters of a percentage point to growth.
In addition, government spending and exports were slightly stronger than first reported. But higher imports offset some of the upward impetus from elsewhere.
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