US housing starts recover from record low

The US Commerce Department has today revealed that housing starts and permits rose in May, recovering from record lows in April.

According to official figures, new housing starts soared 17.2% (the largest rise in three months) to an annual rate of 532,000 units in May, up from April’s figure of 454,000.

However, the rate was still down 45.2% compared with May last year.

Meanwhile, there was further good news for the US housing market after new single family starts rose 7.5% - the largest rise since January 2006. Activity for single family homes have now gained for three consecutive months.

In the meantime, applications for building permits, a barometer of future home construction, rose 4% - the biggest gain for twelve months, to 518,000 units in May.

However, there was bad news today for the world’s largest economy after machinery production fell 3.4% in May following a fall of 2.5% in April.

Industrial production also declined 1.1% in May, hit by falling vehicle output following plant shutdowns by Chrysler.

Michael Moran at Daiwa Securities in New York said he believes the Chrysler bankruptcy was an important factor affecting the motor vehicle sector.

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