Japan's economy contracted 0.3 percent in April-June, slower than the decline in the previous quarter as output recovers from the devastating earthquake in March, Cabinet Office data showed on Monday.

The quarter-on-quarter contraction was smaller than the median estimate for a 0.7 percent decline and follows a 0.9 percent contraction in January-March.

Japan's gross domestic product (GDP) figure translated into an annualized decrease of 1.3 percent, smaller than the median forecast for a 2.6 percent contraction and compares with 1.3 percent annualised growth in the United States in the same quarter.

Private consumption, which makes up around 60 percent of the economy, fell 0.1 percent in April-June as some households cut back on spending after a large earthquake, tsunami and nuclear meltdown in March.

External demand, or net exports, pushed down GDP by 0.8 percentage point, as the disaster prevented some Japanese manufacturers from shipping goods abroad, as imports rose and as overseas economies showed some signs of slowing.

Japan is likely to emerge from recession in July-September as manufacturers shake off supply constraints, but a soaring yen and widespread fears of a sovereign debt crisis pose risks to the country' as fragile recovery.

(Reporting by Tetsushi Kajimoto; Editing by Joseph Radford)

Japan Quake