US housing starts and industrial production rise
The Commerce Department has today revealed US housing starts increased for the month of January but building permits were down.
According to the Commerce Department, construction of new US homes rose 2.8% during the month to a seasonally adjusted annual rate of 591,000 properties.
While this represented the highest level in six months, the figures are still far below the peak of autumn 2007.
In the meantime, applications for building permits, a barometer of future home construction, fell by 4.9% to a seasonally adjusted annual rate of 621,000 in January – however, this was in line with expectations.
Commenting, Ian Shepherdson, chief US economist of High Frequency Economics, said: “Overall, we remain optimistic that housing construction will rise sharply through the first half of the year; second half performance depends on Congress extending the tax credit again.”
Last year, the Government introduced an $8,000 tax credit for first-time buyers to kick-start the housing market.
The tax credit had been due to expire on November 30 but has now been extended to April 30.
In related news, the US Federal Reserve said industrial production rose more than expected last month due to increased activity in manufacturing, utilities and mining.
Output grew 0.9% in January and followed a revised gain of 0.7% in December. January‘s figure was higher than the 0.7% expected and the seventh consecutive rise in output.
Both sets of figures will boost hopes that the economic recovery is gathering strength.
Last month, it was revealed that the US economy grew 5.7% in the final three months of 2009 – the fastest pace in six years and higher than analysts expectations.
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