The US economy stunned forecasters by powering ahead at an annualised 5.7 per cent in the fourth quarter – the fastest pace of growth that it has shown for six years.
The strong performance came at the close of a year in which the world's biggest economy contracted by 2.4 per cent, still the biggest decline since 1946. But the recent turnaround contrasts sharply with events on the other side of the Atlantic which has seen Germany hiccuping while Britain only just crawled out of recession, with fourth quarter growth of just 0.1 per cent.
There was more bad news yesterday with figures showing that joblessness in the eurozone had gone above 10 per cent for the first time since the single currency was introduced in 1999.
The US number compares to the third quarter's annualised growth of 2.2 per cent, and shows that its recovery is gathering pace. Economists said that the figure had to be viewed with some caution because it had been given a significant boost by a dramatic fall in destocking by businesses. However, they said that America's performance was still impressive even when this is stripped out.
Joseph LaVorgna, from Deutsche Bank, said that final sales which excludes inventories rose 2.2 per cent, a significant increase on the previous quarter's. 1.5 per cent. He also highlighted a sharp spike in capital expenditure by US businesses.
"The final sales growth is important, because it tells us that outside of the inventory-inflated headline, the growth figures still show accelerating activity. The biggest surprise in the details of the report was the 13.3 per cent increase in business spending on equipment and software [capex]; in fact, this accounted for nearly all of our forecast miss, as we were anticipating about 4.5 per cent capex growth," said Mr LaVorgna.
The figures were also helped by a slowdown in the rate at which imports increased and continued improvement in car sales, with motor vehicle output adding 0.61 per cent to the fourth-quarter change in real GDP, helped by the US scrappage scheme.
Yesterday's numbers were only a first estimate and could yet be subject to considerable revision, however, ensuring the US economy returns to sustainable growth remains a key challenge for President Barack Obama. In his State of the Union address on Wednesday he outlined a host of measures designed to create jobs and nurture the recovery.
Despite signs that the economy is gathering pace, US unemployment has remained stubbornly high, although economists have suggested that this could turn around relatively quickly because productivity is also high and firms will have to start hiring again as the recovery gathers pace as they will not be able to squeeze much more out of their workforces.
In a further boost to recovery hopes, the Institute for Supply Management in Chicago said its business barometer rose to 61.5 in January, the highest in four years, from 58.7 in December.
In Europe, it had been reported that the jobless rate hit 10 per cent in November but that has been revised down to 9.9 per cent. The 10 per cent unemployment rate, however, means that 15.8 million people are now out of work within the eurozone, which is likely to cause deep concern among policymakers.
Across the 27 EU countries, 23 million are out of work. In the UK, however, the jobless total has fallen slightly. In a downbeat assessment of Europe's prospects, Howard Archer, economist with IHS Global Insight, said: "While the eurozone economy is now growing again, it is hardly racing ahead and significant concerns and uncertainties remain over the strength and sustainability of the recovery."Reuse content