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US economic decline slows further US economic decline slows further
(about 1 hour later)
The US economy shrank at an annualised rate of 1% in the April-to-June quarter, government figures have shown.The US economy shrank at an annualised rate of 1% in the April-to-June quarter, government figures have shown.
The data was better-than-expected, with many economists predicting a slightly bigger contraction of 1.5%. The data was better-than-expected, with many economists predicting a bigger contraction of 1.5%.
The pace of decline seems to be easing, after a revised 6.4% fall in GDP in the previous quarter, the Commerce Department said. Analysts said the data suggested that the worst could be over for the US economy, which has now been in recession for a year.
On Wednesday, the Federal Reserve's influential Beige Book said US economic activity had "begun to stabilise". The economy contracted by 6.4% in the previous quarter, the Commerce Department said.
Although, the second-quarter data was better than forecast, the Commerce Department said that the economy had shrunk by more than initially thought in the first quarter. This was worse than a previous estimate of a 5.5% contraction.
It has previously estimated a contraction of 5.5%. 'Worst behind us'
The figures show that the pace of contraction is slowing rapidly in the US, even more than in the UK.
"We're seeing signs of stabilisation in a lot of areas of the economy, so the worst is definitely behind us," said Scott Brown, chief economist at Raymond James & Associates.
ANALYSIS Steve Schifferes, economics reporter, BBC News
That reflects the effect of the stimulus package which has boosted government spending.
However, it still could be a number of quarters before output recovers to the level before the downturn started.
The severity of that downturn was emphasised by the downward revision of the first quarter's growth, making it one of the biggest quarterly economic drops in US history.
The improved economic performance in the second quarter was largely due to government spending.
However, there were still falls in investment and personal consumption.
While the latest data is better than forecast, the downward revisions to the previous quarters were more than expected, pushing the year-on-year contraction to 3.9%.
This was "considerably worse than the predicted -2.9%," said Chris Low, an analyst at FTN Financial.