The U.S. economy expanded more than previously reported last quarter on a sunnier picture of household spending, the primary growth engine.

Gross domestic product rose at a 3.2% annualized rate in the three months ended in September, the fastest in two years, compared with an initial estimate of 2.9%, Commerce Department figures showed Tuesday. The median forecast in a Bloomberg survey called for a 3% gain.

While business investment remains a weak spot, solid labor-market progress and steady household purchases kept growth on track ahead of the holiday shopping season. The figures are likely to reinforce projections for Federal Reserve policy makers to raise the benchmark interest rate in December for the first time this year, with inflation getting closer to the central bank's goal.