The US economy grew by 3.4 percent at an annual rate in the April-to-June quarter, slowing down in the wake of soaring energy costs, the Commerce Department said Friday.

The increase in the gross domestic product (GDP) for the second quarter followed a larger 3.8 percent growth rate in the first three months of this year.

GDP measures the value of all goods and services produced within the United States. Economists had expected a growth rate of 3.5 percent for the second quarter.

Data released by the department showed that consumer spending, which accounts for about two-thirds of the economic activity, rose 3.3 percent after growing 3.5 percent in the first quarter. Business investment advanced 9 percent, compared to an increase of 5.7 percent in the first quarter.

Business inventories, however, were a big drag on GDP, subtracting 2.32 percentage points from growth. Companies drew down about 6.4 billion dollars' worth of goods in the second quarter, according to the department.

The personal consumption expenditure price index, an inflation gauge tied to the GDP report, climbed 3.3 percent in the second quarter, up from 2.3 percent in the first quarter.

While excluding volatile food and energy, the core price index nudged up a more modest 1.8 percent in the second quarter, lower than the pace of 2.4 percent in the first quarter.

According to the department's revised data, meanwhile, economic growth averaged 2.8 percent over the last three years, down from the 3.1 percent estimated originally.

The revised data showed the GDP growth rate in 2004 was 4.2 percent, lower than the old estimate of 4.4 percent. The growth rate for 2003 was 2.7 percent in stead of 3 percent, and the 2002 growth rate was 1.6 percent rather than 1.9 percent.

The GDP figure released by the Commerce Department Friday will be revised twice in the coming months as more data on the economy's performance arrive.

Source: Xinhua