U.S. industrial production up 1%, housing starts down 2.6%

By Staff, with files from The Associated Press | May 16, 2017 | Last updated on May 16, 2017
2 min read

American industry expanded production last month at the fastest pace in more than three years as manufacturers and mines recovered from a March downturn.

The Federal Reserve said Tuesday that U.S. industrial production at factories, mines and utilities shot up 1% in April from March, the biggest gain since February 2014. Factory production rose 1% after declining 0.4% in March. Mine production increased 1.2% after falling 0.4% in March. And utility output rose 0.7% after surging 8.2% in March.

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Factory production has risen three of four months this year. Manufacturing has recovered from a rough patch in late 2015 and early 2016 caused by cutbacks in the energy industry and a strong dollar, which makes U.S. goods costlier in foreign markets.

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Meanwhile, construction of new homes fell for a second straight month in April, pushing activity to the lowest point in five months.

The Commerce Department says housing starts fell 2.6% in April to a seasonally adjusted annual rate of 1.17 million units. That followed a 6.6% decline in March, and left home building at its lowest point since last November. The weakness was led by a big drop in construction of apartments — a volatile sector.

Housing construction has been one of the bright spots for the economy, adding half a percentage point to growth in Q1. Analysts expect that the number of Americans seeking homes will rebound in coming months.

“We look for housing to continue to make a positive contribution to GDP growth going forward,” says Josh Nye, economist at RBC, in an economics update. “Strong labour markets, rising confidence, improving household balance sheets, accommodative financial conditions and limited supply in the existing home sales market all argue for further recovery in home-building activity.”

Further, he says there are no signs of a negative impact from the recently announced duties on Canadian softwood lumber. “Healthy permit issuance and strong home builders’ confidence also point to recent strength being maintained,” he says. Building permits also declined in April but remained solidly above starts, at 1,229k annualized units.

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Staff, with files from The Associated Press

The Associated Press is an American not-for-profit news agency headquartered in New York City.