ASSOCIATED PRESS Enlarge
WASHINGTON -- The U.S. economy is looking slightly weaker.
Economic growth was a little slower in the first three months of the year than first estimated, largely because governments and consumers spent less and businesses restocked their supplies more slowly.
Last week the number of people who applied for unemployment benefits rose to a five-week high. And a survey of private companies showed only modest hiring gains last month. Still, a softer job market has not caused Americans to curtail spending. Consumers spent more at retail stores in May than in the year-earlier month, buying more clothes and Mother's Day gifts.
Thursday's data showed that:
The U.S. economy, as measured by Gross Domestic Product, grew at an annual rate of 1.9 percent in the first three months of the year, the Commerce Department said in its second of three estimates of January-March growth. That was lower than in the department's initial estimate of 2.2 percent.
Weekly applications for unemployment aid rose 10,000 to a seasonally adjusted 383,000, the Labor Department said.
Private businesses added 133,000 jobs last month, according to a survey by ADP, a payroll processor. That figure disappointed most economists, who had hoped to see job growth accelerate. ADP's survey had found that in April just 113,000 jobs were added. Peter Newland, an economist at Barclays Research, said he was discouraged by the slowdown in first-quarter growth.
"This report does little to change the perception of an economy ticking along at a moderate pace but failing to break out into a full-on recovery with consistently above-potential growth," Mr. Newland said.
When the government issues its report today on May employment, economists expect it to say that employers added 158,000 jobs.
That would be better than in the past two months but far below the winter's pace of 252,000 jobs per month. They also expect no change in the unemployment rate, which was 8.1 percent in April.
The government makes three estimates of quarterly economic growth, or gross domestic product.
GDP measures the output of all goods and services in the United States, from haircuts and coffee to airplanes and appliances.
A big reason growth slowed in the January-March quarter was that government spending at all levels fell at a 3.9 percent annual rate. That is the biggest decline in a year and nearly a full percentage point more than estimated last month.
Government spending has declined for six straight quarters. And national defense spending has tumbled in the past two quarters. It fell at an 8.3 percent annual rate in the first quarter of 2012 and at a 12.1 percent annual rate in the final three months of 2011. The declines largely reflect the winding down of the Iraq war.
Analysts think the economy is growing at a slightly faster rate this spring. Hiring has been steady, and gas prices are lower, allowing consumers to spend more freely. Consumer spending amounts to 70 percent of economic activity.