Manufacturing, construction likely ended ’17 on good note
A light week of economic news will provide a snapshot of two resurgent forces of the U.S. economy — manufacturing and housing construction. Both probably ended 2017 on a solid note, supplying some momentum for this year.
Industrial production has been propelled by a steadily improving global economy, a dollar that generally has weakened since early 2017, making American goods less expensive overseas, and a revival in oil drilling. In December, automaking probably rebounded from a drop the previous month while other sectors continue to climb, Nomura economist Lewis Alexander says. He says oil and natural gas production showed no sign of slowing, and frigid weather probably boosted utility output sharply.
Overall, economists estimate the Federal Reserve will report Wednesday that indus- trial production rose a healthy 0.4% in December.
An index that gauges the outlook of home builders can often provide a preview of housing construction in the months ahead. The market improved last year as solid job and income growth drove demand while home supplies remained skimpy, pushing prices higher. The crunch spurred builders to churn out more houses. In December, an index of prospective buyer traffic jumped eight points, underscoring continued strong buyer interest despite the rising prices, Alexander says. On the downside, the cold weather may have temporarily chilled homebuying plans this month.
Alexander estimates the National Association of Home Builders will announce that its index of builder sentiment ticked up from 74 to 75, which would mark a 19-year high.
Though housing starts have been ramping higher, they’ve presented a tale of two mar- kets. Single-family starts have been bolstered by the supply shortage and more recently by rebuilding efforts in parts of Texas and Florida battered by hurricanes late last summer. Multifamily building has declined after a blitz of apartment construction the past few years. Economists project the Commerce Department will announce Thursday that housing starts dipped 2.1% in December to a still-solid seasonally adjusted annual rate of 1.27 million.