U.S. Postal Service 1st-quarter profit $672 mln

WASHINGTON, Jan 30 (Reuters) - The U.S. Postal Service reported on Wednesday a preliminary fiscal first-quarter profit of $672 million despite a decline in mail volume that caused revenues to fall $500 million short of expectations.

Total mail volume declined three percent in the quarter ending Dec. 31, a trend Postal Service Chief Financial Officer Glen Walker attributed to weakness in the overall U.S. economy.

"The financial industry and housing industry are both big pieces of our revenue," Walker told a Postal Service Board of Governors meeting. "They're suffering and they're certainly not mailing as much."

A year ago the Postal Service reported a $2.7 billion loss due to accelerated funding of retiree health benefits mandated by federal law.

The Postal Service reported $20.4 billion in revenue in the first quarter, up $689 million from a year ago but $500 million below what it had planned for.

To offset the revenue shortfall, the service cut more than $300 million of its planned expenditures for the first quarter.

First class mail volume decreased 3.9 percent, a business increasingly under threat as Internet communication grows.

The Postal Service also competes with commercial rivals such as FedEx Corp (FDX.N), which reported net income of $479 million for its most recent quarter, and United Parcel Service Inc (UPS.N), which reported a $2.58 billion loss on Wednesday after a pension-related charge.

Final first-quarter results for the Postal Service will be released in February. (Reporting by Ayesha Rascoe; Editing by Tim Dobbyn)