THE US economy grew at an annual rate of 1.9 per cent in the second quarter, a faster pace than earlier in the year but slower than economists were expecting, the commerce department said yesterday.

Growth was lifted by surging exports and falling imports, and higher levels of consumer spending aided by the delivery of nearly $100 billion in government stimulus-plan cheques.

But businesses drew down stocks more rapidly in the second quarter as they hunkered down amid tough economic conditions, keeping gross domestic product gains to below the 2.3 per cent forecast by economists.

The fiscal stimulus contributed to a 1.5 per cent increase in personal consumption in the second quarter, compared with a 0.9 per cent jump in the first quarter.

But many economists were expecting as much as a 2 per cent gain. Henry Paulson, Treasury secretary, said the stimulus plan had "supported the US economy during this difficult period . . . companies invested and benefited from strong export growth".

Federal Reserve policymakers meet next week and are widely expected to keep rates on hold. - (Financial Times service)