WASHINGTON: The United States is seeing the first signs of growth after a long recession, Treasury chief Timothy Geithner said as new data showed the lowest payrolls decline in nearly a year.

The world's largest economy has been in recession since December 2007, saddled by economic contraction for four quarters since July last year.

Geithner gave the clearest indication yet that growth was underway even though most private economists expect an economic expansion in the July to September period after massive government stimulus.

"You have seen now the first signs of growth, positive growth, in this country and around the world," he said in a media briefing ahead of a meeting of the Group of 20 (G20) finance ministers and central bank governors in London at the weekend.

"We have come a very long way but I think we have to be realistic, we have a long way to go still," he cautioned.

The US economy contracted at a slower pace of 1.0 percent in the second quarter after a hefty 6.4 percent decline in the first quarter.

Geithner said effective steps taken by the G20 emerging and developed nations helped kickstart economic recovery following the global slump.

"The force of the powerful response we have put in place here and at the G2O... has been very successful in helping pulling the global economy back from the edge of the abyss," he said.

Even as growth returns in the United States, analysts caution that rising unemployment could dampen consumer spending, which accounts for about two-thirds of economic activity.

Latest data from payrolls firm ADP said Wednesday that the private sector shed 298,000 jobs in August, the smallest number of jobs lost since September 2008.

It was larger than the market's forecast of 250,000 jobs lost but much less than the 360,000 figure in July.

"Employment losses are clearly diminishing," ADP said.

But it cautioned that despite indications that overall economic activity was stabilizing, employment, which usually trails overall economic activity, was still likely to decline for at least several more months, albeit at a diminishing rate.

The ADP figure came ahead of Friday's government August nonfarm payrolls report, seen as one of the best indicators of economic momentum.

Most analysts believe the report should show a smaller loss of 225,000 jobs compared with a 247,000 decline in July and an unemployment rate ticking up to 9.5 percent from a 26-year high of 9.4 percent.

"In absolute terms, and relative to previous cycles, to see payrolls falling at this pace after 20 months of recession is a very grim performance indeed," said Ian Shepherdson, chief US economist with High Frequency Economics.

He forecast the government will announce 250,000 jobs lost in August.

"At this turning point in the economy, we should expect the payroll declines to go up and down," said Joel Naroff, chief economist of Naroff Economic Advisors.

"The key is the trend and that is falling." he said. "Even if the August losses are higher than July's and the unemployment rate jumps, that does not mean the recession is picking back up or the recovery is not going to occur."

President Barack Obama has warned that the jobless rate could soar to about 10 percent by year-end, even with an improving economy.