The US economy slowed last quarter to its most sluggish pace in four years, figures published yesterday showed.
Growth fell to 0.6 per cent from 2.5 per cent the previous quarter, said the Commerce Department, which slashed its initial growth estimate by more than half.
The slowdown was worse than economists expected but is likely to be viewed by the Federal Reserve as a prelude to a gradual recovery. The Fed said in minutes published this week that it expected a moderate pick-up in growth in coming quarters.However, the central bank warned the 18-month housing slump could drag out.
The Office of Federal Housing Enterprise Oversight said separately yesterday that house price appreciation last quarter was the slowest in a decade.
The federal regulator said that contrary to some economists' expectations, the average price of a US home had not fallen, but instead rose by 0.5 per cent.
A sharp drop in residential investment last quarter braked growth, with an overall 15.4 per cent fall restraining expansion.
The main factors behind yesterday's downward revision of the US growth estimate for the first quarter were a wider trade deficit and a depletion of business inventories.
The trade gap widened as imports increased more strongly than initially estimated, with a gain of 5.7 per cent, while exports fell by 0.6 per cent.
Businesses cut the levels of stock on shelves and in warehouses by an equivalent of $4.5 billion a year, a sharp reversal from an initial estimate that inventories had risen by $14.8 billion.
