The US economy started the current year with robust growth, as demonstrated by the initial estimate for first quarter gross domestic product (GDP). Annualised economic growth came to 2.3 percent and therefore came in slightly above expectations. Private investment delivered the greatest growth spurt, accounting for 1.2 percentage points alone of economic growth. The fact that one third alone of this boost is attributable to stockbuilding is less pleasing. Nonetheless, we believe the US economy will remain on a solid growth trajectory for the rest of the year and forecast economic growth of over 2.5 percent this year. The Fed is likely to continue on its course of moderate monetary policy tightening.
On the one hand, in the last quarter of 2017, the economy at times suffered considerably from extreme blizzards, hence extraordinary effects. On the other, the trend barometers in all economic sectors and also among private consumers was unchanged at a very high level. Some of these improved even further compared with the fourth quarter. The solid scenario is complemented by well-filled order books in most of the industrial companies and by a constantly high number of building permits for residential housing.
However, since the first deadlines of the latent trade conflict are set to expire in the coming weeks, we are quite comfortable with a slightly muted outlook for growth. The uncertainty about the future framework for international trade is expected to prompt caution among some investors. Even though the tax cuts were not passed by Congress until the end of the year, we believe that pre-emptive effects as regards investment were seen already last year. We therefore expect solid economic growth, even though the growth rates will not be sky high.
The temporary period of bitterly cold weather and heavy snowstorms appear to be the reason why numerous goods remained on the shelf at the start of the year and therefore had to be stored. This is clearly reflected in the slowdown in the pace of private consumption growth. For the first time in many quarters, the demand among private households for goods made a slightly negative contribution to growth. As the retail sales figures had already implied, weak demand for cars curbed growth considerably. Even the demand for other goods, such as furniture and seasonal leisure goods, failed to made the usual contribution to the overall economic momentum. On the other hand, the demand for services alone made a contribution of almost one percentage point to growth. Ultimately though, the growth in consumption clearly eased overall: the 2.75 percentage point contribution to growth in the last quarter of 2017 was followed by a figure of only 0.7 percentage points in the first quarter.
Despite the marked stockpiling, investment data painted a quite solid picture on the whole. The non-residential sector, which after all accounts for more than half of private investment, ensured the same impetus as in the previous quarter, contributing almost 0.8 percentage points to growth. Although this is down to less momentum from capital expenditure, it followed on however extraordinarily strong growth previously. Commercial construction experienced an exactly opposed, very positive development, where the pace of growth doubled. A contribution of 0.3 percentage points was recorded here, the strongest momentum in four quarters. On the contrary, the stagnation of housing construction was neither surprising nor disappointing. For one, the high level of the previous quarter was maintained despite the negative weather-related impact. Secondly, housing construction had been very volatile in recent quarters, which is thought to be due to the greater importance of multifamily construction.
The slightly positive effect from foreign trade at the start of the year should also be viewed against the background of the latent trade conflict. The weak positive contribution to growth of only 0.2 percentage points is attributable in particular to the surprisingly weak momentum in imports. We also saw a slowdown in export growth, albeit not quite so strong. These figures are therefore unlikely to help defuse the conflict.