Gross domestic product in the US grew at 1 per cent in the first quarter this year, despite a sluggish jobs market, according to data released today.

Higher exports, more consumer spending and higher business investment boosted growth, easing the risk of recession, according to the US commerce department report.

The figures show the US economy had grown slightly more than estimated. GDP, which measures total output and services within the US, was 1 per cent in the first three months of 2008, slighty better than economists' predictions of a 0.9 per cent growth.

April's figures had suggested GDP growth was at 0.6 per cent, leading to fears that America would slip into receission.

The report “further underscores the fact that, despite the serious headwinds and economic strains caused by rising energy prices, the US economy has not contracted,” said Marc Chandler of Brown Brothers Harriman

Yesterday, the US Federal reserve, as predicted by many, left interest rates unchanged, despite concerns about rising inflation. The Fed pointed to strong consumer spending as part of its reason to resist a rate hike, despite a slump in the housing market and subsequent squeeze on credit.

That decision was backed up by the figures released today, with consumer speding rising 1.1 per cent in the first quarter, slightly more than 1 per cent than had been estimated last month.

However, the Commerce department report showed that prices continued to rise, suggesting the Fed will have to act soon to curb inflation. The price index for gross domestic purchases, a closely watched measure of inflation, rose at a rate of 3.6 per cent, up 0.1 percentage point more than had been estimated. Excluding food and energy, the price index was up 2.3 per cent.

The effect of the credit crunch on US business was also evident, as figures showed that corporate profits after taxes in the first quarter rose 2.5 per cent, slower than the 3.8 per cent estimated in May.

Explore Economics

• Pre-Budget Report 2008

• Budget 2008

• World Economic Forum

• The Times MPC

Times Recommends

• Gazprom brands Ukraine 'a barbarian' in gas row
• Services sector raises fears over UK jobless
• Retailers surge as profits survive sales plunge