The US economy is set to keep growing in the months ahead, but at a lower than expected rate, according to a closely-watched survey.

The Index of Leading Indicators - a 'survey of surveys' gauging current economic activity and expectations for the next six months - edged just 0.1% higher in March, compared with analysts' forecasts of a 0.3% increase.

The moderate increase reinforces the view that the US economy's recovery from recession will be slow.

"Since the recession was short and shallow, it will not provide the thrust delivered by earlier recessions," said Ken Goldstein, economist at the Conference Board, the research firm which compiled the index.

Slow and steady

Previous US recoveries have been marked by spectacular surges in economic growth, fuelled by pent-up demand.

The Conference Board index began to rise in October last year, but was unchanged in February.

The US economy is thought to have slipped into recession in March last year as companies, unnerved by a plunge in internet share prices a few months earlier, slashed their spending plans.

The 11 September attacks, which sapped consumers' already depleted confidence and paralysed the travel and tourism sectors, exacerbated the downturn.

Interest rate outlook

However, aggressive interest rate cuts by the US Federal Reserve, which slashed the cost of borrowing to a 40-year low of 1.75% last year, are credited with staving off a more protracted recession.

With consumer demand remaining relatively buoyant, the US economy grew at an annual rate of 1.4% during the last three months of 2001, far outstripping most analysts' forecasts.

Although rates are now forecast to start rising in line with stronger growth, Fed Chairman Alan Greenspan earlier this week hinted during talks with a Congressional Committee that an imminent increase is unlikely.

An economic rebound in the US - the world's biggest economy - would shore up a tentative recovery in the UK and mainland Europe through increased export demand.