* First-quarter growth forecast slowing to 1.2 percent rate
* Cold weather, inventories to take a bite out of GDP growth
* Exports also a drag, but economic growth outlook upbeat
By Lucia Mutikani
WASHINGTON, April 30 U.S. economic growth likely
braked sharply in the first quarter due partly to an unusually
cold and disruptive winter, but activity already appears to be
Gross domestic product probably grew at a 1.2 percent annual
rate, according to a Reuters survey of economists, pulling back
from the fourth quarter's 2.6 percent pace.
An abrupt slowdown in export growth and a less rapid pace of
restocking by businesses are expected to have added to the drag
from the weather.
U.S. financial markets and Federal Reserve officials are
likely to brush aside the slowdown in growth, given the
temporary factors at play, and focus on recent data suggesting
strength at the tail end of the quarter.
"We have effectively written off first-quarter growth
performance in part due to the adverse weather conditions," said
Millan Mulraine, deputy chief economist at TD Securities in
New York. "With underlying momentum remaining favorable we
continue to anticipate a meaningful rebound in the second
The Commerce Department will release its first snapshot of
first-quarter GDP at 8:30 a.m. (1230 GMT) on Wednesday, just
hours before the Fed wraps up a two-day policy meeting.
Fed officials, who have already dismissed the first quarter
as being compromised by the weather, are expected to announce a
further reduction in the amount of money they are pumping into
the economy through monthly bond purchases.
"They will shrug off the report and continue to stress that
the outlook is bright and that economy is poised to accelerate
going forward," said Thomas Costerg, a U.S. economist at
Standard Chartered Bank in New York.
FEWER ORDERS AT FACTORIES
Severe weather may have chopped off as much as 1.4
percentage points from GDP growth. After aggressively restocking
in the second half of 2013, businesses have been accumulating
inventory at a moderate pace.
That has resulted in manufacturers receiving fewer orders.
Trade also likely undercut growth, partly because of the
weather, which left goods piling up at ports.
Together, inventories and trade are forecast to slice off at
least one percentage point from GDP growth.
The economy's fundamentals, however, likely remained solid.
A measure of domestic demand that strips out exports and
inventories is expected to have accelerated from the fourth
quarter's tepid 1.6 percent pace.
Consumer spending, which accounts for more than two-thirds
of U.S. economic activity, probably slowed from the
fourth-quarter's brisk 3.3 percent pace as freezing temperatures
reduced foot traffic to shopping malls.
But demand for heating likely tempered the deceleration.
Economists said the weather also likely undercut business
spending on equipment, but investment in nonresidential
structures, such as gas drilling, probably rebounded.
Investment in home building is expected to have 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
would suggest 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.
"It's a surprise that housing is actually a drag on GDP, but
I don't think you will see another contraction," said Costerg.
(Reporting by Lucia Mutikani; Editing by Meredith Mazzilli)