WASHINGTON - By Lucia Mutikani
WASHINGTON, April 30 (Reuters) - The U.S. economy barely
grew in the first quarter as exports tumbled and businesses
accumulated stocks at the slowest pace in nearly a year, but
activity already appears to be bouncing back.
Gross domestic product expanded at a 0.1 percent annual
rate, the slowest since the fourth quarter of 2012, the Commerce
Department said on Wednesday. That was a sharp pullback from the
fourth quarter's 2.6 percent pace.
Economists polled by Reuters had expected growth to slow to
a 1.2 percent rate. The slowdown partly reflected an unusually
cold and disruptive winter, marked by declines in sectors
ranging from business spending to home building.
The Commerce Department's first snapshot of first-quarter
growth was released just hours before the Federal Reserve wraps
up a two-day policy meeting.
While harsh weather could partially explain the weakness in
growth, the magnitude of the slowdown could complicate the U.S.
central bank's message as it is set to announce a further
reduction in the amount of money it is pumping into the economy
through monthly bond purchases. [ID:nL2N0NL0W9]
The first-quarter slowdown, however, is likely to be
temporary and recent data have suggested strength at the tail
end of the quarter.
Economists estimate severe weather could have chopped off as
much as 1.4 percentage points from GDP growth. The government,
however, gave no details on the impact of the weather.
INVENTORY GROWTH DECELERATES
After aggressively restocking in the second half of 2013,
businesses accumulated $87.4 billion worth of inventory in the
first quarter, the smallest amount since the second quarter of
2013.
That was a moderation from the $111.7 billion amassed in the
fourth quarter that has resulted in manufacturers receiving
fewer orders. Inventories subtracted 0.57 percentage point from
GDP growth in the first quarter.
Trade also undercut growth, taking off 0.83 percentage
point, partly because of the weather, which left goods piling up
at ports. Exports fell at a 7.6 percent rate in the first quarter after growing at a 9.5 percent pace in the final three months of 2013.
Together, inventories and trade sliced off 1.4 percentage
point from GDP growth.
Consumer spending, which accounts for more than two-thirds
of U.S. economic activity, increased at a 3.0 percent rate,
reflecting a spurt in spending on services linked to the
Affordable Healthcare Act.
Spending on goods, however, slowed sharply, indicating that
frigid temperatures during the winter had reduced foot traffic
to shopping malls. Consumer spending had increased at a brisk
3.3 percent pace in the fourth-quarter.
Harsh weather also undercut business spending on equipment.
While investment in nonresidential structures, such as gas
drilling, rebounded, the increase was minor.
Investment in home building contracted for a second straight
quarter, in part because of the weather. But a rise in mortgage
rates over the past year has also hurt.
A second quarter of contraction in spending on home building
suggests a housing recession, which could raise some eyebrows at
the U.S. central bank. A bounce back is, however, expected in
the April-June period.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)