US GDP growth slows more than expected in Q1 2017

Economic activity in the States slowed at the start of the year, weighed down by a slowdown in the pace of inventory accumulation, lower public spending and increased imports.

Gross domestic product expanded by 0.7% quarter-on-quarter, according to preliminary data from the Bureau of Economic Analysis.

That was wide of the 1.2% pace of expansion economists had pencilled in and less than the expansion of 2.1% seen over the previous quarter.

The Bureau said Friday's estimate was based on incomplete source data which can also be subject to revisions. To take note off, first quarter GDP estimates tend to underestimate economic growth due to quirks in the process of seasonally adjusting the data.

A second estimate of first quarter GDP will be published on 26 May.

A slowdown in household spending to just 0.3% was the main driver of the weakness in GDP, even as investment in business structures jumped by 22.1%, their biggest rise since early 2014.

"That weakness, in our view, is likely to prove transitory. Warm weather reduced utilities consumption, motor vehicle purchases declined to a more sustainable rate, and early in the quarter, tax refunds were delayed. These factors combined with the timing of the Easter/Passover holiday (in April this year) and a weak March employment report likely weighed on consumption growth," said economists at Barclays Research.