By Charles Duxbury 
 

STOCKHOLM--Sweden's economy returned to growth in the second quarter, boosted by rising household consumption and exports, but the upswing was smaller than expected and the Swedish currency fell.

Sweden's statistics agency said Wednesday that gross domestic increased 0.2% in the three months to the end of June from the first quarter, which was less than the 0.6% expected by analysts polled by The Wall Street Journal. The Swedish krona fell against the euro, which rose to 9.24 kronor from 9.19 kronor after the data was published.

The numbers suggest the Swedish economy remains in a slow recovery with domestic consumption continuing to offset muted demand for Swedish goods overseas.

Statistics Sweden said the economy grew 1.9% in annual terms with household consumption up 2.9% and exports rising 1.7%.

Forward looking indicators such as the purchasing managers' index and confidence surveys are also pointing to a steady improvement in the economic outlook.

That outlook will likely strengthen the central bank's resolve to keep interest rates low well into next year as it seeks to push inflation up toward a 2% target.

The bank cut its main rate to a record low 0.25% this month and without the support of a stronger economic upswing the bank will likely judge that looser monetary policy remains appropriate.

Economic output declined 0.1% in the first quarter.

-Write to Charles Duxbury at charles.duxbury@wsj.com