There were two important reports on the U.S. economy released this morning. First, total industrial production in America rose in March by 0.5 percent, according to new data from the Federal Reserve Board of Governors. That was better than anticipated and helped by a 3.0 percent gain in utilities related to unusually cold weather across the country (more people using heating). However, strength was broad last month, with solid increases seen in mining and business spending on equipment. Further, capacity utilization, sometimes used as a leading indicator of inflation and potential output, lifted to 78.0 percent last month, the best reading in three years.
Elsewhere, privately-owned housing starts in March grew at a seasonally adjusted annual rate of 1.319 million units, according to a new report from the U.S. Census Bureau. That was a 10.9 percent jump from February’s upward-revised print and much better than economists expected. However, all of the strength was due to a 16.1 percent spike in multi-family starts (rentals), while single-family housing starts decreased by 3.7 percent. Regionally, housing starts rose in the Midwest (+22.4 percent) and the Northeast (+0.8 percent) last month and fell in the West (-1.5 percent) and the South (-0.6 percent). As for building permits, this metric of future construction activity also firmed in March, but again the strength was concentrated among rental properties. NAHB Chairman Randy Noel added that “Strong demand for housing is keeping builders optimistic about future market conditions. However, builders are facing supply-side constraints, such as a lack of buildable lots and increasing construction material costs. Tariffs placed on Canadian lumber and other imported products are pushing up prices and hurting housing affordability.”
Sources: Econoday, FRBG, U.S. Census Bureau, NAHB, FRBSLPost author: Charles Couch