The U.S. economy expanded in the third quarter at a faster pace than initially reported, led by the biggest increase in inventories since early 1998. Consumer spending slowed.

Gross domestic product climbed at a 3.6 percent annualized rate, up from an initial estimate of 2.8 percent and the strongest since the first quarter of 2012, Commerce department figures showed today in Washington. The median forecast of 77 economists surveyed by Bloomberg predicted a 3.1 percent gain.

The buildup in stockpiles risks limiting factory production without stronger demand. Faster growth in household purchases, which grew at the slowest pace in almost four years, and a rebound in business investment would help companies justify increasing orders and adding workers.

“The big boost is from inventories, but the big question for fourth-quarter growth is whether this is voluntary inventory expansion or involuntary,” Sam Coffin, an economist at UBS Securities LLC in Stamford, Connecticut, said before the report. In the current quarter, “we won’t have an outright drawdown, but we will have slower inventory investment, and that slowing will be a negative for growth.”

Forecasts for the increase in GDP, the value of all goods and services produced in the U.S., ranged from 2.2 percent to 3.6 percent, according to the Bloomberg survey. The GDP reading is the second of three for the quarter, with the final release scheduled for Dec. 20 when more information becomes available.

Another report today showed first-time claims for jobless benefits dropped by 23,000 to 298,000 last week, according to the Labor Department.

The pickup in GDP followed gains of 2.5 percent in the previous quarter and 1.1 percent in the first three months of the year.

More Inventories

Inventories increased at a $116.5 billion annualized pace in the third quarter, the most since the first quarter of 1998, after a previously reported $86 billion rate. In the second quarter, they rose at a $56.6 billion pace. Stockpiles added 1.68 percentage points to GDP last quarter, double the initial estimate and the biggest contribution since the end of 2011.

Final sales, which exclude inventories, increased 1.9 percent in the third quarter after a 2.1 percent gain the prior three months.