Industrial output in US cools but stays strong
Housing starts increase
WASHINGTON, April 17, (Agencies): US industrial output growth slowed last month amid a sudden drop off in manufacturing but remained strong overall thanks in part to higher energy consumption, the Federal Reserve said Tuesday.
A return to cooler weather after February’s warm spell saw utilities ramp up production, pushing the monthly result past analyst expectations.
Industrial production rose 0.5 percent in March, down from February’s one percent gain but above the 0.3 percent economists had predicted.
Despite the slowdown, which could point to more sluggish growth in the first quarter, March was still 4.3 percent above the same month last year.
Manufacturing growth, however, nearly ground to a halt, edging up only 0.1 percent despite a 2.7 percent jump in the auto sector, with vehicle assemblies moving up to an annual rate of 12 million units — the highest level since December of 2016.
Within the manufacturing sector, fabricated metal goods, computer and electronic equipment, printed matter, textiles and clothing all experienced sharp drops in March.
Total capacity in use rose to 78 percent, also overshooting a consensus forecast and up three tenths of a point from February — but still below its long-term average.
Manufacturing capacity specifically fell 0.1 percent to 75.9 percent, also below average.
Oil and gas production drove the mining sector one percent higher — although this was a slower gain than the 2.9 percent recorded in February.
US homebuilding increased more than expected in March amid a rebound in the construction of multi-family housing units, but weakness in the single-family segment suggested the housing market was slowing.
Housing starts rose 1.9 percent to a seasonally adjusted annual rate of 1.319 million units, the Commerce Department said on Tuesday. Data for February was revised up to show groundbreaking declining to a 1.295 million-unit pace instead of the previously reported 1.236 million units.
Economists polled by Reuters had forecast housing starts rising to a pace of 1.262 million units last month. Permits for future home building rose 2.5 percent to a rate of 1.354 million units in March.
US financial markets were little moved by the data.
Despite the rebound in homebuilding last month, activity appears to be slowing. Single-family homebuilding, which accounts for the largest share of the housing market, fell 3.7 percent to a rate of 867,000 units in March.
A survey on Monday showed confidence among homebuilders fell in April for a fourth straight month. Builders complained about a lack of buildable lots and increasing construction material costs. According to the survey, tariffs imposed by the Trump administration on Canadian lumber and other imported products were “pushing up prices and hurting housing affordability.”
Confronted with these supply constraints, homebuilding will probably not increase significantly to eradicate an acute shortage of houses on the market, which is pushing up prices and sidelining some first-time home buyers.
Demand for housing is being driven by a robust labor market, which is underpinning the economy. Despite jobs market strength, wage inflation has remained moderate.
Single-family home construction fell in the Northeast, South and West, but rose in the Midwest. Permits to build single-family homes dropped 5.5 percent in March to an 840,000 unit-pace, the lowest level since September 2017.