Economic Watch: Housing Starts Best Since '07, Industrial Production Jumps
January 17, 2014
U.S. housing starts reached their highest level last year since 2007, according to new figures released by the Commerce Department on Friday.
The annual rate registered 923,400 single-family homes and apartments, an 18% increase above 2012 figure of 780,600.
For December, home starts fell 9.8% compared to the month before, for an annual rate of 999,000, following November’s surge, taking it to a 1.1 million annual rate, the highest for 2013. The December rate is 1.6% higher than the annual rate from the same time a year earlier.
Meantime, the number of building permits issued in December, a barometer of future home construction, declined 3% from November, to an annual rate of 986,000, but is 4.6% higher from the same time a year earlier.
For all of 2013, 974,700 building permits were issued, a 17.5% increase from 2012.
“Last year was a good year for home building,” said David Crowe, chief economist with the National Association of Homebuilders. “As pent-up demand is unlocked and the labor market improves, we anticipate that 2014 should be an even better year for home construction. That’s good news for economic growth, as each new home that is built creates three full-time jobs and contributes to the tax base of local communities.”
Unseasonably cold weather in December is believed to be responsible for much of the decline in home starts and building permits for the month.
Another indicator of the health of the American economy, industrial production, rose 0.3% in December, its fifth consecutive monthly increase, according to the Federal Reserve.
For the fourth quarter, this measure of the total activity at the nation’s factories, mines and utilities advanced at an annual rate of 6.8%, the largest quarterly increase since the second quarter of 2010, while gains were widespread across industries.
Following increases of 0.6% in each of the previous two months, factory output, which makes up about three-quarters of total industrial production, rose 0.4% in December and was 2.6% above its year-earlier level. The production at mines moved up 0.8% compared to the month before, while the output at utilities fell 1.4% after three consecutive monthly gains.
Total industrial production in December was 3.7% above the 2012 level and 0.9% above its pre-recession peak in December 2007. Capacity utilization for total industry moved up one-tenth of a percentage point to 79.2%, a rate one-percentage point below its long-run average from 1972 to 2012.
ATA Chief Economist Bob Costello described the report via Twitter as good, saying, the factory output increase of 0.4% in December is “in-line with expectations” with auto production also being strong. “Overall [a] good report for trucking.”