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US economy shrinks less in second quarter
(Agencies)
Updated: 2009-09-30 22:18

WASHINGTON: The US economy contracted at slower pace than previously thought in the second quarter, but a further decline in private payrolls in September was another indication that recovery from recession would be patchy.

US economy shrinks less in second quarter
Customers leave a store with their purchases in Alexandria, Virginia, September 15, 2009.[Agencies] 

The Commerce Department said on Wednesday gross domestic product fell at a 0.7 percent annual rate instead of the 1.0 percent decline reported last month. This was better than market expectations for a 1.2 percent drop.

GDP, which measures total goods and services output within US borders, fell at a 6.4 percent rate in the January-March period.

A separate survey by the ADP Employer Services showed private employers 254,000 jobs in September more than the 210,000 layoffs the market had been expecting. However it was less than the 277,000 jobs lost in August.

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"It's (GDP) not an earth-shaking revision, but it does show a healthier picture than before because domestic spending is less weak. It's unlikely to change perceptions about the third-quarter outlook," said Pierre Ellis, a senior economist at Decision Economics in New York.

US stock futures rose after the GDP report, regaining losses suffered after data on private sector employment showed more job losses than expected in September. Bond prices fell on the news, while the dollar rose against the euro.

The decline in GDP will probably mark the last quarter of contracting output for the US economy, which slipped into recession in December 2007. The economy is believed to have rebounded in the July-September quarter.

With the second-quarter contraction, the country's real GDP has shrunk for four straight quarters for the first time since government records started in 1947.

The shallow decline in activity in the second quarter reflected more moderate drops in consumer spending and business investment than previously thought, the report showed.

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