Image: Steven Pisano Image: Steven Pisano

Growth in the US economy slowed to 0.5% in the first quarter of the year, according to official stats.

Growth fell from 1.4% in the final three months of 2015 and marks the slowest growth for two years.

Failing to meet analysts expectations, the economy was hit by falling consumer demand and a strong dollar which in turn had a negative effect on exports.

The US Commerce Department figures showed that consumer spending, which accounts for roughly two-thirds of the economy, grew by 1.9% in the quarter, down from 2.4% in the previous three months. And business investment contracted by 5.9%, the single largest fall since the financial crisis in 2009.

With oil firms counting the cost of downward oil prices, oil and gas exploration dropped by a record 86%.

Chris Williamson, economist at economics researchers Markit, said: "Worryingly, the surveys indicate that the malaise affecting the US economy has extended into the second quarter, albeit with the pace of expansion picking up slightly to 0.8%. The surveys also show weakness spreading from manufacturing to services in recent months."

Having made the decision to keep interest rates on hold, the US Federal Reserve said that "labour market conditions have improved further even as growth in economic activity appears to have slowed".