Wednesday, May 16, 2007

Housing Starts Rise, Building Permits Fall, Industrial Production Surges

- Housing Starts for April rose to 1528K versus estimates of 1480K and 1491K in March.
- Building Permits for April fell to 1429K versus estimates of 1520K and 1569K in March.
- Industrial Production for April rose .7% versus estimates of a .3% gain and a -.3% decline in March.
- Capacity Utilization for April rose to 81.6% versus estimates of 81.5% and 81.2% in March.

BOTTOM LINE: Housing starts in the US unexpectedly rose last month, while building permits fell more than estimates, Bloomberg reported. Housing starts soared 31% in the Northeast and rose 7.8% in the West. Starts fell 14% in the Midwest and .1% in the South. The number of homes under construction fell .5%. The number of housing units authorized, but not yet started, decreased 6.1%. I continue to believe home sales are stabilizing at relatively high levels, while new home construction remains muted throughout the year as builders work down inventories.

Industrial Production in the US rose more than forecast last month as cold weather boosted electricity demand and manufacturers stepped up output after whittling down excess inventories, Bloomberg said. Autos and high-tech goods led the gains in factory output. Utility production rose 3.5%. Nationwide, April was the coldest in a decade, which boosted output. I continue to believe companies are increasing production to build depleted inventories as demand remains healthy.

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