The U.S. economy grew at a 3 percent annual rate in the fourth quarter, faster than originally estimated on unexpectedly strong business restocking, the Commerce Department said Wednesday.

The agency had estimated in January that fourth-quarter gross domestic product growth was 2.8 percent, and analysts polled by Reuters had expected that the number would be unchanged.

The economy seems to be advancing at a persistent, albeit still modest, pace, Richard DeKaser, deputy chief economist at Parthenon Group LLC in Boston, told Bloomberg. The figure was buoyed to some extent by inventory rebuilding, but we're returning to the 2.5 percent trend pace that the expansion enjoyed before things went off track at roughly this time last year. 

The economy grew faster compared to the third quarter of 2011, when the growth was 1.8 percent. Real GDP has also increased 1.7 percent between 2010 to 2011, said the Commerce Department. 

Consumer spending was revised upward to 2.1 percent from 2 percent. Real final sales were up 1.1 percent, up from 0.9 percent. Inventories totaled $54.3 billion down from an initial $56 billion.

Real disposable income was up 1.4 percent in the fourth quarter, upwardly revised from 0.8 percent. The personal savings rate was 4.5 percent, up from the initial estimate of 3.7 percent.

Inflation in the consumer price index rose 1.2 percent during the quarter, or 1.3 percent excluding food and energy.

Other economic indicators have also shown improvement, with unemployment dropping to 8.3 percent, and manufacturing output growing in the last month.

However, reduced government spending and rising gasoline prices may hurt the outlook.

The Commerce Department will revise its fourth-quarter GDP estimate again on March 29.