By Harriet Torry

WASHINGTON -- The U.S. economy's first-quarter contraction was slightly steeper than initially estimated, and a key measure of corporate profits weakened as coronavirus-related shutdowns began to come into effect.

Gross domestic product -- the value of all goods and services produced across the economy -- fell at a 5.0% annual rate in the first quarter, adjusted for seasonality and inflation, the Commerce Department said Thursday.

The revised number marked the largest quarterly rate of decline since the last recession. Most economists expect a bigger contraction in the second quarter, when lockdowns continued for weeks before states started slowly reopening their economies in May.

The agency previously estimated the first-quarter contraction at a 4.8% annual rate.

"First-quarter growth turned negative from just a two-week shutdown of the economy," said Rubeela Farooqi, an economist at High Frequency Economics Ltd., in a note to clients. "The second quarter numbers will show a massive and unprecedented plunge in output, with weakness across sectors."

A bigger estimate of the drop in private inventory investment was the main reason for the weaker GDP reading, which was partly offset by small upward revisions to consumer spending and business investment.

Private, nonfarm inventories subtracted 1.52 percentage points from the overall GDP. The Commerce Department's initial estimate was for a 0.63 percentage-point drag from inventory investment.

U.S. corporate profits fell sharply in early 2020 as the economy contracted, according to the government's first broad estimate of profits at U.S. companies in the first quarter. Stay-at-home orders and lockdowns that shut businesses to combat the spread of the new coronavirus started in mid-March near the end of the first quarter.

After-tax corporate profits without inventory valuation and capital consumption adjustments, a measure of profits from production that quarter, declined 15.9% in the first quarter from the prior quarter after rising 3.7% in the fourth quarter.

Compared with a year earlier, profits were significantly lower in the first quarter, down 11.1%.

Forecasting firm IHS Markit on Tuesday projected GDP would shrink at an annual rate of 39% in the second quarter, now in its ninth week. The Federal Reserve Bank of Atlanta's GDPNow model most recently predicted a 41.9% annual rate of decline. The annualized rate overstates the severity of any drop in output because it assumes that one quarter's pace continues for a year.

Consumer spending accounts for more than two-thirds of total economic output, and Thursday's report showed Americans' outlays contracted in the January-to-March period, but by a slightly lesser amount than initially estimated. Personal-consumption expenditures fell at a 6.8% annual rate in the first quarter, revised from a previous estimate of a 7.6% decline.

Business investment weakened in the first quarter, with fixed nonresidential investment falling at a 7.9% annual rate, an upward revision from an earlier estimate of an 8.6% contraction.

"The economy is in a slump right now," said John Pfeifer, chief operating officer at trucks and equipment maker Oshkosh Corp., at a virtual conference in mid-May. "It's always tough to get to manage through the trees in a tough climate like we're in right now."

Revised data showed net exports added 1.32 percentage points to GDP as imports declined faster than exports. That compared with an earlier estimate of 1.30 percentage points.

Per-share earnings for S&P 500 companies fell 12.6% in the first quarter of 2020, compared with the first quarter of 2019, market-data firm Refinitiv said. Companies in the consumer discretionary and financial sectors were the hardest hit, followed by energy and industrial companies.

Not all sectors were hard hit. Technology, health-care and consumer staples companies posted per-share earnings gains of more than 5%, Refinitiv said.

Sales fell 1.4% for the index as a whole, led by financial and energy companies. Sales rose by 10.4% among health-care companies and by around 5% for real estate, consumer staples and communication services companies.

Analysts expect second-quarter results to be worse, with per-share earnings declining about 43% over mid-2019 and sales falling about 12%, Refinitiv said. Analysts projected continued profit and sales declines during the second half before year-over-year gains resume early next year.

Thursday's report reinforced the view by many economists that the U.S. economy slid toward near-certain recession in the first quarter.

"Swift monetary and fiscal stimulus has been put in place to help the markets to help businesses and those individuals who are suffering, but the stress on the economy is real and will take time to recover," Morgan Stanley Chief Executive James Gorman said last week during the bank's annual shareholders' meeting.

Theo Francis contributed to this article.

Write to Harriet Torry at harriet.torry@wsj.com