WASHINGTON - First quarter GDP growth rose only 0.7% at an annual rate in the advance estimate, a softer reading that the 1.2% gain expected, as slower PCE and inventories growth and a drop in government spending more than offset sharp gains in both residential and nonresidential fixed investment, data released Friday by the Bureau of Economic Analysis showed.
PCE growth slowed to a 0.3% annual rate from a 3.5% increase in the previous quarter. Durables PCE fell 2.5%, nondurable PCE rose 1.5%, and services PCE was up 0.4%. Government spending was down 1.7% after a modest 0.2% fourth quarter gain.
Nonresidential fixed investment jumped by 9.4% in most recent quarter, a much stronger pace of growth than the 0.9% gain in the fourth quarter. The BEA said that nonresidential fixed investment growth was driven in large part by a record 449% gain in investment for mining and wells. Investment in structures rose 22.1% in the quarter, while investment in equipment rose 9.1%
Residential fixed investment was up 13.7% after rising by 9.6% in the previous quarter.
However, inventories were up only $10.3 billion after rising by $49.6 billion in the fourth quarter.
When the inventory slowdown is removed, real final sales were up 1.6% in the first quarter after a 1.1% increase in the fourth quarter.
The net export gap narrowed very modestly to $602.7 billion from $605.0 billion in the fourth quarter, as exports rebounded by 5.8% after a 4.5% decline in the previous quarter. Imports rose only 4.1% in the first quarter following a 9.0% surge in the previous quarter.
The chain price index rose 2.3% in the first quarter, ahead of the 2.0% pace expected and the 2.1% growth pace in the previous quarter. The closely watched core PCE price index was up 2.0% in most recent quarter after a 1.3% fourth quarter gain. The year/year rate for this measure remained at 1.7% for the third consecutive quarter.
