The US economy continued to contract in the first quarter of this year, but at a slower pace than previously thought, as the pain of the recession spread from consumers to businesses in the face of eroding global demand.

Revised commerce department figures showed on Friday that US gross domestic product declined by an annualised rate of 5.7 per cent in the first three months of the year, compared with last month’s estimate of 6.1 per cent. The decline was less severe than original projections due to slower liquidation of inventories and the narrowing trade gap.