The dollar fell against the yen on Friday after a government report showing a slower-than-expected contraction in the U.S. economy in the second quarter was offset by a decline in consumer spending.

That prompted investors to shun risk and weighed on U.S. stock futures. The euro also pared gains versus the dollar after the report.

The U.S. economy contracted at a 1.0 percent rate in the second quarter, according to government data on Friday. Analysts polled by Reuters had forecast GDP falling at a 1.5 percent rate.

Despite the fact GDP fell less than expected, investors focused on the consumer spending component, which showed a 1.2 percent drop after a 0.6 percent rise the previous quarter.

Consumer spending accounts for over two-thirds of U.S. economic activity.

“The better-than-expected number seems to be offset by a renewed decline in consumer spending,” said Ashraf Laidi, chief market strategist at CMC Markets in London.

“This report has written all over it the continued divergence between consumers and businesses. Consumers are still struggling. I don’t expect this to be a big boost for risk appetite.”

In early New York trading, the dollar fell 0.2 percent against the yen at 95.28 yen compared with 95.75 before the GDP report.

The euro was at $1.4112, up 0.3 percent on the day, but was down from $1.4135 before the data.

NEW YORK, July 31 (Reuters)