July 29, 2006	Saturday	Rajab 2, 1427

WASHINGTON, July 28: The US economy grew by just 2.5 per cent in the three months to June, a marked slowdown from the first quarter's blistering pace of 5.6 per cent, the government said on Friday.

The annual rate of expansion in gross domestic product (GDP) — the broadest measure of economic activity -- was much worse than Wall Street's second-quarter forecast of 3 per cent.

However, the figure released by the Commerce Department was only a first estimate and is likely to be revised later on.

The department said the deceleration in real GDP growth in the second quarter largely reflected downturns in consumer spending on durable goods, equipment and software.

Export growth was much slower in the quarter, while federal government spending and residential fixed investment also went down.

The department report showed rising inflationary pressures. It said that the index of personal consumption expenditures (PCE) went up by 4.1pc in the second quarter, more than double the 2 per cent of January-March.—AFP