WASHINGTON (AP) - Economic growth rebounded at better-than-expected 3.3% annual rate in the April-June quarter, the government said Thursday.

The Commerce Department says the economy shifted to a higher gear, growing at its fastest pace in nearly a year, as foreign buyers snapped up U.S. exports and tax rebates spurred shoppers at home.

The revised reading was much better than the government’s initial estimate of a 1.9% pace and exceeded economists’ expectations for a 2.7% growth rate.

The rebound comes after two dismal quarters. The economy shrank in the final three months of 2007 and limped into the first quarter at a feeble 0.9% annual growth rate. The 3.3% growth in the spring was the best performance since the third quarter last year, when the economy was chugging along at a brisk 4.8% pace.

READ THE REPORT: Bureau of Economic Analysis press release

Still, the growth pickup is not likely to be seen as a lasting sign that the fragile economy is back on solid ground.

Federal Reserve Chairman Ben Bernanke recently warned the economy will be weak through the rest of this year. A growing number of analysts fear that the country will hit another economic pothole in the fourth quarter, as the bracing impact of the tax rebates disappears. And there are concerns exports could tail off as other countries’ economies slow down.

GDP measures the value of all goods and services produced within the U.S. and is the best barometer of the country’s economic health.

In a second report Thursday, the Labor Department said applications for unemployment benefits dropped to a seasonally adjusted 425,000 in the latest week, down 10,000 from the previous week. That is the third straight drop from a six-year high reached earlier this month and slightly better than the 427,000 analysts expected.

Still, economists consider claims above 400,000 an indicator of a slowing economy. Companies have cut jobs every month this year as they grapple with rising energy costs and tighter credit.

The biggest factor in the second-quarter’s GDP rebound was robust sales of U.S. exports to other countries. The weaker value of the dollar bolstered those sales. Exports grew at a 13.2% pace in the spring. That was much stronger than the government’s initial estimate of a 9.2% growth rate, and more than double the 5.1% growth rate logged in the first quarter.

Imports, meanwhile, fell at a 7.6% annualized pace in the spring, as economic troubles in the U.S. crimped demand for foreign-made goods.

The improved trade picture added 3.1 percentage points to second-quarter GDP, most since 1980.

U.S. consumers boosted their spending at a 1.7% annual rate in the second quarter. That was slightly better than the 1.5% growth rate initially reported and marked the best showing in nearly a year. Government stimulus checks of up to $600 per person helped energize shoppers who had hunkered down because of the economy’s problems.

One of the country’s biggest problems - the housing collapse - was evident in the GDP report.

Builders cut back at an annual rate of 15.7% in the second quarter, although that was a better showing than early this year and late last year.

Businesses trimmed spending on equipment and software in the spring. And they reduced investment in inventories, but not as much as initially estimated by the government. That was another factor contributing to the improved GDP reading.

One measure of corporate profits showed companies losing ground in the second quarter. After-tax profits fell 3.8% in the spring, compared with a 1.1% increase in the first quarter.

An inflation gauge tied to the GDP report showed all prices rising at an annual rate of 4.2% in the second quarter, the same as initially estimated.

Taking out energy and food, prices rose at a 2.1% rate. That also was unchanged from the government’s previous estimate but remained outside the Federal Reserve’s comfort zone.

With the economy still coping with fallout from housing and credit problems, the Fed is expected to hold interest rates steady at its next meeting on Sept. 16, and probably through the rest of this year.