The economy in the US expanded at a slower pace in the third quarter as firms took advantage of gains in consumer and business spending to reduce bloated stockpiles.

The US economy grew faster than initially thought in the second quarter on solid domestic demand, showing fairly strong momentum that could still allow the Federal Reserve to hike interest rates this year.

The US economy shrank at a steep annual rate of 2.9% in the January-March quarter as a harsh winter contributed to the biggest contraction since the depths of the recession five years ago.

Employers added more workers than projected in February, indicating the US economy is starting to bounce back from a weather-induced setback. The jobless rate climbed from a five-year low.

The US Federal Reserve, still striving to coax the struggling economy to stronger growth, cut a key interest rate to its lowest level since the 1950s.