Economy Watch: Housing Starts Up
- Jun 19, 2013
Homebuilders were reported to be more optimistic on Tuesday, and on Wednesday they had some reason to be, though not quite to the level of irrational exuberance: housing starts in May came in at an annualized rate of 914,000 units, according to the Census Bureau. That’s 6.8 percent above the revised April rate of 856,000 units, and 28.6 percent above the May 2012 annualized rate of 711,000 units.
Most of the monthly increase was due to multifamily development. Single-family housing starts in May were at a rate of 599,000, which is 0.3 percent above the April figure. Still, the trend for both single-family and multifamily development is positive: during the first five months of 2013, multifamily starts were up nearly 40 percent from the same period in 2012, and single-family starts were up about 24 percent.
The issuance of building permits was also positive in May, noted the bureau. Single-family authorizations in May were at an annualized rate of 622,000 units, which is 1.3 percent above the revised April figure of 614,000. Permits for buildings with five units or more—apartments, that is—came in at a rate of 374,000 in April.
CPI barely moves in May
The Bureau of Labor Statistics said on Tuesday that the Consumer Price Index barely budged in May, rising 0.1 percent, following the 0.4 percent drop in April, which was an unusually large decline for a month. Year-over-year, the CPI was up 1.4 percent in May. The report comes ahead of a meeting of the Federal Open Market Committee that’s widely acknowledged to be an important one, and tells the central bankers that inflation is still no bogeyman.
The cost of shelter rose 0.3 percent and accounted for more than half of the increase for all items in May (apartment rents are up, that is—no surprise there). Energy rose modestly, with the gasoline flat but increases in electricity and natural gas accounting for the rise. The price of food index, however, turned down in May, with the cost of food at home dropping 0.3 percent.
The index for all items less food and energy, which is known as the “core” rate among economists, was up 0.2 percent in May. Besides the shelter increase, prices were up for airline fares, recreation, and apparel. On the other hand, the price of used cars and trucks, and—mirabile dictu—medical care declined in May. The index for all items less food and energy was up 1.7 percent since the same month last year.
G-8 sets stage for major trade talks
The G-8 meeting in Northern Ireland wrapped up on Tuesday after communiqués and promises about various international problems had been released. It’s possible, however, that the main long-term fruit of the meeting will be some kind of uber-trade agreement between the United States and the EU. Talks will begin about that in Washington, D.C., in July.
Wall Street still had some mojo on Tuesday, with the Dow Jones Industrial Average gaining 138.38 points, or 0.91 percent. The S&P 500 was up 0.78 percent and the Nasdaq advanced 0.87 percent.