U.S. Industry Shows Some Vigor, But Housing Still Soft

Construction At A Toll Brothers Development Ahead Of Housing Starts Figures
Patrick T. Fallon/Bloomberg via Getty Images
By Lucia Mutikani

WASHINGTON -- - U.S. industrial production rose at a faster-than-expected clip in March, the latest sign the economy was gaining momentum.

Groundbreaking for new homes also increased but remained well below the post-recession peak hit in November, signaling the drag the housing market is placing on the economy.

Output at the nation's factories, mines and utilities rose 0.7 percent last month after an upwardly revised gain of 1.2 percent in February, the Federal Reserve said Wednesday.

Economists had expected industrial production to rise 0.5 percent. Manufacturing output gained 0.5 percent, while production at mines rose 1.5 percent and utilities' output increased 1 percent.

"The overall tone of this report was very encouraging, with the buoyancy in the manufacturing sector reaffirming our very constructive view on the economic growth performance during the last few months of the quarter,"
said Millan Mulraine, deputy chief economist at TD Securities in New York.

A separate report from the Commerce Department showed housing starts failed to bounce back as strongly as expected after being weighed down by unusually harsh winter weather.

Groundbreaking activity increased 2.8 percent in March to a seasonally adjusted annual rate of 946,000. Economists, however, expected a rise to a 973,000-unit rate.

Compared to March last year, starts were down 5.9 percent, the biggest decline since April 2011.

"Given the weather, housing is still disappointing," said Scott Brown, chief economist at Raymond James in St. Petersburg, Fla.

While the cold winter weighed on homebuilding in December and January, activity has also been hampered by shortages of building lots and skilled labor, as well as rising prices for materials.

Major U.S. stock indexes traded higher as investors were heartened by data that showed stronger than expected economic growth in China. An index tracking shares of homebuilders also rose.. Prices for U.S. Treasuries fell.

Single-Family Starts Rise

A report Tuesday showed homebuilders in April were still downbeat about the sector's near-term prospects. The housing market is under strain from higher mortgage rates and elevated house prices that are sidelining potential buyers.

"Mortgage rates are higher than where they were a year ago and you have sluggish wage growth so a lot of the low-end buyers are being priced out," Brown said.

But there is a ray of hope for a pick-up. In another report Wednesday, the Mortgage Bankers Association said applications for loans to buy houses rose last week.

The MBA's builder application survey data also showed mortgage applications for new home purchases increased 15 percent in March compared to February. The data hasn't been adjusted for seasonal fluctuations.

Groundbreaking for single-family homes, the largest segment of the market, surged 6 percent to a 635,000-unit pace last month. Starts for the volatile multifamily homes segment fell 3.1 percent to a 311,000-unit rate.

That was the lowest level since last October.

Starts jumped 30.7 percent in the Northeast and 65.5 percent in the Midwest, but fell in both the South and West.

Permits to build homes fell 2.4 percent in March to a 990,000-unit pace. Permits for single-family homes rose 0.5 percent but fell 6.4 percent for the multifamily sector.

-Additional reporting by Richard Leong and Elvina Nawaguna.


Increase your money and finance knowledge from home

Intro to Retirement

Get started early planning for your long term future.

View Course »

Intro to different retirement accounts

What does it mean to have a 401(k)? IRA?

View Course »

Add a Comment

*0 / 3000 Character Maximum

11 Comments

Filter by:
Iselin007

Too many of the same old same stuff jobs are flying under the same corporate banner destabilizing employment.

The downsizing of the middle class to virtual allowances makes it nearly impossible for people to travel much further ect. I can't believe another large downward decline isn't on the way in spite of all the spinning. You just don't buy by a recovery on nickels and dimes.

April 16 2014 at 11:04 PM Report abuse rate up rate down Reply
Iselin007

By repeating an excess of the same low wage part time same old same stuff your just setting the economy for more job cuts,revenue short falls ect. Basically that is the jobs that replaced manufacturing losses.

April 16 2014 at 10:47 PM Report abuse rate up rate down Reply
Iselin007

Low participations rates are not glitches that suddenly rise like up like stocks. Basically low particpation signals trouble.

April 16 2014 at 10:20 PM Report abuse rate up rate down Reply
Iselin007

A rising tide will lift all boats? Will see as the ice melts and the tides rise permanently.

April 16 2014 at 9:56 PM Report abuse rate up rate down Reply
Iselin007

The high productivy boosted by additional technology advances will likely cause an increasing over supply of labor. I wonder if the technocrats have pondered that?

April 16 2014 at 9:54 PM Report abuse rate up rate down Reply
Iselin007

Other than cases of fraud increasing usage of food stamps and other poverty assistance gives you a snap shot of the real economy's job picture.

April 16 2014 at 9:33 PM Report abuse rate up rate down Reply
Iselin007

Can't always hear Yellen's comments but I heard the media's version.

Supposedly the media say's interest rates will stay low another 2 years when full employment will be reached. Interesting full employment should be counting those that lost a job and all the people that have been piling up as the population grows.

Age discrimination and other reasons have prevented many older people from finding re-employment. Many younger people are being kept from finding more skilled jobs because of the never ending flow of visa workers's. Construction and other workers have to take retail jobs which keep other workers from finding positions. The real labor force available is too huge driving down wages and hours.

Much of the labor report is estimates which conseals the dire desperation in the job market. Like the business annalysts are saying the taxes are keeping investment off shore.

April 16 2014 at 9:21 PM Report abuse rate up rate down Reply
progressivehoax

ROTFLMFAO

April 16 2014 at 3:05 PM Report abuse -2 rate up rate down Reply
Valerie

"And the cow jumped over the moon..." LOL

April 16 2014 at 2:10 PM Report abuse rate up rate down Reply
createidea

WASHINGTON -- - U.S. industrial production rose at a faster-than-expected clip in March, the latest sign the economy was gaining momentum.....

LOL !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Yeah, right.

April 16 2014 at 1:49 PM Report abuse rate up rate down Reply
1 reply to createidea's comment
Iselin007

I hope they are not including those fancy substitutions of manufacturing production like pizza and hamburger assembler jobs at the local corner shop.

April 16 2014 at 9:37 PM Report abuse rate up rate down Reply