NEW YORK, April 30 (Reuters) - The U.S. economy barely grew in the first quarter as exports tumbled and businesses accumulated stocks at the slowest pace in nearly a year, but activity already appears to be bouncing back.
Gross domestic product expanded at a 0.1 percent annual rate, the slowest since the fourth quarter of 2012, the Commerce Department said on Wednesday. That was a sharp pullback from the fourth quarter's 2.6 percent pace.
U.S. private employers added 220,000 workers in April, the highest amount since November and above analysts' expectations, a report by a payrolls processor showed on Wednesday.
Gains in the prior month were revised higher, to 209,000 from 191,000. Economists surveyed by Reuters had forecast that the ADP National Employment Report would show a gain of 210,000 jobs in April.
GUS FAUCHER, SENIOR ECONOMIST AT PNC FINANCIAL SERVICES IN PITTSBURGH
"That is a big, big surprise. It's very big disappointment. There's weakness across the board. The housing we could tie largely to weather, but not so with equipment and business equipment. We know the trade was weak as with inventory. There's another subtraction in government. Weather was a big chunk of it, but that's all of it, which is concerning. Consumer spending was pretty solid, which is a positive.
"What the Fed might think is that this will be revised up. Everything else is showing us that the economy is picking up. This weakness is not carrying through the second quarter. I think the Fed will not read too much into it and will likely discount this number. The deflator and PCE are below what the Fed wants to see and that's a reason for them to keep the federal funds near zero into the second half of this year."
ANNALISA PIAZZA, HEAD OF FIXED INCOME STRATEGIC RESEARCH, NEWEDGE STRATEGY, LONDON:
"The breakdown of the report shows a mixed picture across the main components. PCE was surprisingly strong in Q1, up by a robust 3 percent, led by a solid rebound in the services sector.
"All in all, today's GDP was clearly disappointing. However, some of the decline is clearly explained by adverse weather over the winter and will be reversed in the coming quarter. We rule out that the Fed will modify its policy outlook on the back of today's GDP report and the gradual tapering is set to continue in the coming months."
MARK VITNER, SENIOR ECONOMIST AT WELLS FARGO SECURITIES IN CHARLOTTE, NORTH CAROLINA
"We are seeing a rebound in job gains since the winter. We are optimistic about Friday's payrolls number. The employment indicator in yesterday's Conference Board consumer confidence was not supportive of a strong payroll number for April, however. I don't think we are going to see the Federal Reserve signaling anything about a rate increase based on the recent employment data because they were light in the beginning of the year. We have to see some stronger months ahead, and April will be one of those months for catch-up. The strength in the labor market is broadening. Construction jobs have been strong recently and governments have been adding more jobs after cutting them for a couple of years. The overall job gains will not change much what we have seen . But the quality of the jobs will be better than what we have seen which would be positive on overall wage gains,"
STOCKS: U.S. stock index futures are lower BONDS: U.S. bond prices generally higher, though long bond is 3/32 lower FOREX: Dollar is weaker against currency basket
(Americas Economics and Markets Desk; +1-646 223-6300)