(Reuters) -The U.S. economy grew more slowly in the first quarter than previously estimated after downward revisions to consumer spending, the Commerce Department reported on Thursday.

Gross domestic product – the broadest measure of economic activity – grew at an 1.3% annualized rate from January through March, down from the advance estimate of 1.6% and notably slower than the 3.4% pace in the final three months of 2023.

The downgrade of first-quarter growth followed recent softness in readings of retail sales and equipment spending.

A measure of inflation during the first quarter was revised down to 3.3% from 3.4%, the stiffest quarterly price-pressure growth in a year. After easing through much of last year, measures of inflation came in higher than expected to start 2024, driving Federal Reserve policymakers to push back expectations for when they’ll be able to pivot to interest rate cuts.

U.S. Treasury yields ticked lower after the modest downward revision to inflation in the first quarter, and equity index futures pared losses ahead of the opening bell on Wall Street.

The downward revision to GDP brings the first-quarter’s growth rate to the lowest since the second quarter of 2022, when the economy contracted, and leaves output below the 1.8% rate that officials at the Fed see as its longer-run, noninflationary potential.

The soft start to the year is not expected to have persisted into the current second quarter, however, thanks in part to continued strength in the job market.

JOBLESS CLAIMS STILL LOW

The number of Americans filing new claims for unemployment benefits ticked higher last week, the Labor Department said also on Thursday, but underlying strength in the labor market still shows signs of persisting and should continue to support the economy.

Initial claims for state unemployment benefits rose 3,000 to a seasonally adjusted 219,000 for the week ended May 25. Economists polled by Reuters had forecast 218,000 claims.

The so-called continuing claims tracking those who collect benefits beyond the first week rose 4,000 to a seasonally adjusted 1.791 million during the week ending May 18, the claims report showed.

The labor market is steadily rebalancing in the wake of 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022 to slow demand in the overall economy.

(Reporting By Dan Burns;Editing by Chizu Nomiyama)