US GDP shrinks 1 per cent in the second quarter

Real gross domestic product (GDP) of the US, a measure of all the goods and services produced in the country, declined at an annual rate of 1 per cent in the second quarter, better than the expected private-sector drop of 1.5 per cent, the commerce department's Bureau of Economic Analysis said in a release.

This decline is noticeably less than the larger decreases of 5.4 per cent in the fourth quarter of 2008 and 6.4 per cent in the first quarter of 2009.

The revisions to 2008 data suggest that the economic slowdown was greater in that year than previously measured, with real GDP falling 1.9 per cent during the four quarters of 2008 rather than 0.8 per cent as was previously reported.

"Today's GDP numbers demonstrate that we are making real progress in ending this recession. Leading indicators of activity are pointing up, and the housing sector appears to be stabilising," commerce secretary Gary Locke said in a statement.

"As more stimulus dollars hit the street, we should make headway in improving the difficult employment and financial conditions in many hard-hit regions of the country," he added.

The figures helped to extend sterling's gain on the dollar as investors were encouraged to leave the safety of the greenback for currencies that are perceived to be higher risk.