US industrial production jumps in April

Housing starts, building permits fall

WASHINGTON, May 16, (Agencies): Cold weather and strong mining activity combined with a solid showing by manufacturing firms to drive a jump in US industrial production in April, the Federal Reserve reported Wednesday.

Even the sharp decline in production of cars and auto parts was not enough to dampen the strong start to the first quarter, according to the data.

Total industrial production jumped 0.7 percent compared to March, slightly better than economists expected, and was 3.5 percent faster than April 2017.

The output gain in March was revised higher, also to 0.7 percent, but the prior months were revised downward, meaning the production gain in the first quarter of the year was 0.6 percentage points lower than previously reported.

Still, the April data reflected broad strength across nearly all sectors and bodes well for growth in the second quarter.

The “below-normal temperatures” last month drove a 1.9 percent increase in utilities, which included a 10 percent surge in gas due to the strong demand for heating, the report said.

Mining output rose 1.1 percent, and was 10.6 percent higher than the same month of 2017, fueled on gains in oil and gas extraction, which offset the decline in coal mining.

The key manufacturing sector posted a 0.5 percent output increase, which included gains of more than one percent in machinery, computer and electronic products, electrical equipment and appliances, and aerospace and transportation equipment.

However, motor vehicles and parts dropped 1.3 percent, the first decline since November, even while production was more than three percent above April 2017.

Wood products was the only other category that saw a drop of more than one percent.

Total industrial capacity in use in the month rose to 78 percent, the highest since March 2015 but still nearly two points below the long-run average, the Fed said.

Capacity utilization in the manufacturing sector continued its slow but steady rise to 75.8 percent.

Meanwhile, US homebuilding tumbled in April and permits fell, suggesting the housing market continued to tread water amid shortages of land and skilled labor.

Housing starts dropped 3.7 percent to a seasonally adjusted annual rate of 1.287 million units in April, the Commerce Department said on Wednesday. The decline reversed March’s rise.

Data for March was revised to show starts rising to a 1.336 million-unit rate instead of the previously reported 1.319 million-unit pace. Building permits fell 1.8 percent to a rate of 1.352 million units last month.

Economists polled by Reuters had forecast housing starts decreasing to a pace of 1.310 million units last month and permits declining to a 1.350 million-unit rate. Starts fell in the Northeast, West and Midwest, but rose in the South.