The US economy contracted at slower pace than previously thought in the second quarter as improved consumer and business spending cushioned the impact of a record decline in inventories.
The US Commerce Department's final estimate showed gross domestic product fell at a 0.7% annual rate instead of the 1.0% decline reported last month.
Analysts polled by Reuters had forecast GDP, which measures total goods and services output within US borders, slipping at a 1.2% rate in the second quarter after dropping 6.4% in the January-March period.
This will probably mark the last quarter of decline in 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.
Consumer spending, which normally accounts for over two-thirds of US economic activity, fell at a 0.9% rate in the second quarter - smaller than the previously estimated 1.0% decline. Spending rose at a 0.6% rate in the previous quarter.
Business investment fell at a 9.6% rate in the second quarter instead of 10.9%, reflecting slightly better demand for software than previously thought. It tumbled 39.2% in the first quarter.
Weak domestic demand meant businesses continued to reduce their stock of unsold goods. Business inventories plunged by a record $160.2 billion in the second quarter rather than the $159.2 billion drop estimated by the government last month. Stockpiles of unsold goods fell by $113.9 billion in the first quarter.
The drop in inventories subtracted 1.42% from second-quarter GDP, the department said. Excluding inventories, GDP rose 0.7% in the second quarter compared to a 4.1% decline in the first quarter.
The department said corporate profits after taxes rose 0.9%, much lower than the 2.9% it estimated last month. It compared to analysts' forecasts for 3.0% growth.
After tax corporate profits increased 1.3% in the first quarter.
