U.S. economic growth likely braked sharply in the first quarter as harsh weather dampened consumer spending and energy companies struggling with low prices cut spending, but there are signs activity is picking up.

    Gross domestic product (GDP) probably expanded at a 1 percent annual rate, according to a survey of economists. That would be a drop from the fourth quarter’s 2.2 percent pace and mark the weakest reading in a year.

    A strong U.S. dollar and a now-resolved labor dispute at normally busy West Coast ports also likely constrained growth. With both the weather and the ports dispute out of the way, economists warn against reading too much into the expected growth slowdown.

    “The first quarter is not a true reflection of the health of the U.S. economy right now, it’s not the beginning of a downturn,” said Thomas Costerg, an economist at Standard Chartered Bank in New York.

    The U.S. Commerce Department will release its snapshot of first-quarter GDP today, just hours before U.S. Federal Reserve officials conclude a two-day policy meeting.

    Policymakers at the U.S. central bank are expected to acknowledge the softer growth, but shrug it off as temporary in a statement they will issue after their gathering.

    While there are signs the economy is pulling out of the soft patch, data on home building, manufacturing, retail sales and business investment suggest the rebound will lack the vigor seen last year when the economy snapped back after being blindsided by cold weather.

    At the start of this year, many economists believed the Fed would raise interest rates from near zero in June. Now, most of the guessing centers around September.

    “They are looking to see the extent of the bounce back in activity. It leaves them in waiting mode,” said Josh Feinman, chief global economist at Deutsche Asset & Wealth Management in New York.

    Economists estimate unusually cold weather in February chopped off as much as half a percentage point from first-quarter growth, with the port disruptions shaving off a further 0.3 percentage point.

    The weather impact is expected to be seen in weakness in consumer spending.

    Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, is expected to have slowed sharply after expanding in the fourth quarter at its quickest pace since early 2006, even though households enjoyed huge savings from a big drop in gasoline prices.

    “We expect them to spend the windfall in the coming quarters,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

    Construction also likely took a hit from the weather. There were probably other areas of weakness.

    Business investment was likely undermined by lower energy prices, which have cut into domestic oil production.

    Schlumberger, the world’s No. 1 oil-field services provider, has slashed its capital spending plans for this year by about US$500 million to US$2.5 billion, while competitor Halliburton cut its by about 15 percent to US$2.8 billion. (SD-Agencies)