Home building dives to 5-months low in United States
Housing starts fell to a five-month low in May rose, evidence of an uneven recovery that has kept inflation at a minimum.
As the government’s tax incentives for home buyers expired, new home building dropped 10 per cent to a seasonally adjusted annual rate 593,000 units, the lowest level since December, the Commercial Department said on Wednesday.
Industrial production, in contrast, surged 1.2 per cent. Some of the rise was due to a spike in utilities as rising temperatures prompted many Americans to turn on their air conditioners. But manufacturing output was firm as well, climbing 0.9 per cent, according to the Federal Reserve report.
Despite that performance, prices at the wholesale level retreated in May. The Labor Department’s Producer Price Index eased 0.3 per cent as gasoline costs tumbled.
The grim housing picture is a concern for economists. Real estate was at the epicentre of the credit crisis, and many believe construction must play a role in any robust recovery.
“These numbers are not good,” said Dan Cook, senior market analyst at IG Markets in Chicago. “There’s too much (housing) inventory, and it’s going to take a while for the industry to work its way through that.”
That should contribute to a moderation of the US economic recovery in coming months.
“Growth will be slower in the second half” of the year, said Mark Vitner, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.
US stocks were slightly lower after the data, while Treasury debt prices rose.
The percentage decline in
home construction was the biggest in 14 months and April’s housing starts were revised down to show a 3.9 per cent increase from a previously reported 5.8 per cent rise.
Courtesy by BS dtd: June 17, 2010
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Courtesy by BS dtd: June 17, 2010
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