The American economy slowed in the last quarter of 2015 but not as sharply as early estimates had suggested.

Revised GDP figures from the U.S. Commerce Department on Friday show an annualized growth rate of 1.0 per cent in the fourth quarter of last year. 

That's an improvement from the initial estimate of 0.7 per cent growth. The higher revision surprised analysts who'd expected the latest GDP report would show the economy slowing even more — to 0.4 per cent.

Still, one per cent growth is just half the annual growth rate posted in the third quarter.

Government figures show that businesses were stockpiling inventory in the fourth quarter at a higher level than first reported. 

Inventory builds don't bode well for growth prospects in the first quarter, as businesses won't need to order as much in the current quarter if their warehouses are full.

But some economists said that won't derail an expected economic recovery.

"The weaker drag from inventories in the fourth quarter means that any rebound in the first quarter could be slightly more modest than we previously expected," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

"Nevertheless, it still appears that first-quarter GDP growth is on track to rebound to a very healthy 2.5 per cent annualized or higher, which should dampen any concerns about an imminent recession."  

Today's Q4 revision left growth for all of 2015 at 2.4 per cent. That's the same as it was in 2014.

In a separate report, the U.S. Commerce Department said consumer spending rose by a solid 0.5 per cent in January — the largest gain in 10 months.

That adds to signs that economic growth early this year picked up from the slowdown that occurred in the fourth quarter. 

With files from Reuters