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Hospital spending hints Q4 GDP may be revised higher

WASHINGTON (Reuters) - Spending at hospitals surged in the fourth quarter, government data showed on Thursday, suggesting economic growth during that period could be revised significantly higher.

Hospital revenue increased a seasonally adjusted 3.5 percent after declining 1.5 percent in the third quarter, the Commerce Department said in its Quarterly Services Survey report. The figures are not adjusted for inflation.

"The data point to a sizable upward revision to health-care consumption in the fourth quarter, which we think could add about 0.5 percentage to fourth-quarter GDP growth," said Daniel Silver, an economist at JPMorgan in New York.

Last month, the government estimated health-care spending to have increased at a 2.6 percent rate in the fourth quarter, unadjusted for inflation.

That estimate of consumption at hospitals was based on employment, hours and earnings, Silver said.

The government estimated fourth-quarter growth at a 3.0 percent pace. It will publish its final reading on March 29, which will estimate spending at hospitals, based on data reported in the Quarterly Services Survey, or the QSS.

"When deflating these figures, the QSS data also show much stronger growth than the current BEA data," Silver said, referring to the Bureau of Economic Analysis, the statistics agency of the Commerce Department.

A drop in hospital spending in the third quarter caused the government to lower its final growth estimate for gross domestic product for the period to a 1.8 percent annual rate from a 2 percent pace.

(Reporting By Lucia Mutikani; Editing by Jan Paschal)

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