Tuesday, April 19, 2005
Housing starts plunge
U.S. housing starts posted their steepest drop in more than 14 years in March, suggesting some cooling in the long-hot housing market, while producer prices rose steeply on surging energy costs.Roma Luciw of The Globe and Mail has this to add—
Housing starts plunged 17.6 percent in March, their biggest drop since January 1991, to a 1.837 million unit rate from an upwardly revised 2.229 million unit pace in February, the Commerce Department said on Tuesday.
Separately, the Labor Department said its Producer Price Index, a gauge of prices received by farms, factories and refineries, shot up 0.7 percent.
"There was a large drop (in housing starts) and we saw it right across the board, all parts of the country," said Rick Egelton, chief economist at BMO Financial Group in Toronto. He said rising interest rates may finally be having some impact, but cautioned the data is often volatile.
The housing starts report showed widespread weakness, with groundbreaking activity for both single-family and multifamily homes tumbling.
Single-family housing starts slid 14.4 percent to a 1.539 million unit pace, the largest drop since January 1991. Starts on structures with five or more units fell 31.6 percent, the biggest decline since March 2000.
Starts fell 29.3 percent in the Midwest, 18 percent in the South, 12.7 percent in the West and 3.6 percent in the Northeast.
Permits for future groundbreaking, an indicator of builder confidence, also fell more than expected.
David Rosenberg, first vice-president and chief North American economist for Merrill Lynch & Co. Inc. said that favourable weather in February likely raised the level of new home building during that month, so looking at the average from the last two months seems like a better gauge of starts activity.
When combined, starts from February and March fell by 8 per cent from the previous two months, which is not nearly as dramatic a drop as the 17.6 per cent seen last month, he noted.
“Still, it is the fourth major economic data point for March to show a loss of momentum in the economy — employment, retail sales, manufacturing production and now housing — implying the economy is losing steam,” Mr. Rosenberg said
Currency exchange controls going into place?