US economic growth slowed to an annualised rate of just 1.6 per cent in the third quarter of 2006, figures revealed on Friday, as a brutal correction in housing construction and an oil-fuelled rise in imports dragged down economic activity.

The news of the sharper-than-expected slowdown comes at a bad time for the Republican party, which has been leaning on its economic record to shore up support damaged by the war in Iraq in the run-up to midterm elections for Congress on November 7. Growth in the quarter was the slowest since early 2003.