The Commerce Department reported that, after expanding at an annual rate of 0.4 percent in the fourth quarter of 2012,  real gross domestic product in the U.S. increased at a rate of 2.5 percent during the first quarter of 2013.

This is the first of three estimates for the period and the details are not very encouraging. Like most other economic reports over the last month or so, today’s result came in well below the consensus estimate, in this case an expectation of a 3.1 percent growth rate.

Consumer spending continues to drive the U.S. economy, accounting for 2.24 percentage points of the overall 2.5 percent gain, and household expenditures on such items as housing, utilities, and healthcare dominated this category.

Declining government spending subtracted 0.80 percentage points from growth and net exports subtracted 0.50 percentage points, this combination offset by a positive contribution of 1.56 percentage points from gross private domestic investment, two-thirds of which was accounted for by a surge in inventory rather than actual investment.

Following a dramatic decline in the fourth quarter, nearly all of the government spending cutbacks during the first quarter came from defense in what was the steepest back-to-back drop in military outlays since the 1950s.

The Institute for Supply Management reported that the U.S. manufacturing sector expanded at its slowest pace in three months as the index of national factory activity fell from 54.2 in February to 51.3 in March and the new orders and production indexes both tumbled.

Employment was about the only bright spot in this report as this index rose from 52.6 to 54.2 (recall that numbers above and below 50 indicate expansion and contraction, respectively). The key new orders index fell from 57.8 in February to 51.4 last month, still indicating a modest expansion, while production dropped from 57.6 to 52.2.

Exports orders jumped from 53.5 to 56.0 and recently lower oil prices likely played a role in the prices paid index dipping from 61.5 to 54.5.

The Institute for Supply Management reported that the ISM manufacturing index came in well below expectations last month, falling from 54.1 in January to 52.4 in February, as prices paid was one of only a few categories to post an increase.

The important new orders index fell from 57.6 in January to 54.9 last month, still indicating solid growth as readings above and below 50 indicate expansion and contraction, respectively. Production fell from 55.7 to 55.3, employment fell from 54.3 to 53.2, and prices paid rose a full six points, from 55.5 to 61.5.