GDP jump shows businesses perking up

WASHINGTON (Reuters) - Businesses may finally be waking up from the recession.

The economy grew at a faster-than-expected 5.7 percent annual pace in the last quarter of 2009, the strongest growth rate in more than six years. As expected, shifts in business inventories accounted for more than half of the advance.

One surprising source of strength was business investment, which rose at a 2.9 percent clip after a 5.9 percent drop in the previous quarter. Investment in equipment and software jumped at 13.3 percent rate, well above the third quarter’s 1.5 percent pace.

* The revival in business investment is particularly important because it comes in a year of massive retrenchment. For 2009 as a whole, that category declined at a 17.9 percent pace. The latest period marked the first quarterly advance since the second quarter of 2008.

* At the depths of the recession, in the first quarter of 2009, business investment fell at a 39.2 percent pace, so the magnitude of the recovery is huge.

* If businesses are feeling confident enough to pick up spending, the hope is that hiring will soon follow. The January employment report is due next Friday, and an early Reuters poll shows economists are looking for a small gain.

* There is still no sign of life in commercial real estate. Business investment in structures fell at a 15.4 percent pace in the fourth quarter, capping off a dreadful year. That suggests loan losses from commercial real estate will continue to rise.

Editing by Andrea Ricci