A harsh winter, a strong dollar and falling oil prices took their toll on the US economy in the first quarter, the Commerce Department revealed on Friday.

Live US economy contracts thanks to strong dollar and poor weather - live updates

US gross domestic product (GDP) – the broadest measure of economic growth – shrank at an annualized rate of 0.7%. The Commerce Department had previously estimated output grew 0.2% from January through March.

The quarterly economic decline is the first since the economy shrank by an even sharper 2.1% annual rate in the first quarter of 2014. A bleak winter also contributed to that decline as consumers stayed home and some businesses closed.

Business investment fell at a 2.8% pace and exports declined 7.6%, hurt by the strength of the dollar. Consumer spending, which accounts for more than two-thirds of economic output, grew by 1.8% on an annual basis. In the fourth quarter – traditionally the best quarter for consumer spending – it grew 4.4%.

The dip was widely in line with economists predictions and is expected to be temporary. Economists are expecting GDP to grow at a roughly 2% pace in the current quarter.