Industrial Production in U.S. Probably Grew as Home Building Lagged Behind
Industrial production in the U.S. probably climbed in April for a sixth consecutive month, while homebuilding hovered near recession lows, economists said before reports today.
Production at factories, mines and utilities increased 0.4 percent after growing 0.8 percent in March, according to the median forecast of 76 economists surveyed by Bloomberg News. Housing starts climbed 3.6 percent to a 569,000 annual rate last month, other figures may show.
Rising demand from overseas and business investment are lifting sales at companies like Caterpillar Inc. (CAT), which will probably keep manufacturing at the forefront of the economic expansion. A sustained recovery in housing may take time to develop as foreclosures put further pressure on property values.
“We should see gains in manufacturing in coming months on the back of strength in exports and business equipment spending,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “Housing has a long road ahead.”
The Federal Reserve’s production data are due at 9:15 a.m. in Washington. Economists’ estimates ranged from a drop of 0.4 percent to a 0.9 percent increase.
Auto making may be among industries that will cool in coming months as factories face a temporary shortage of parts following the earthquake and tsunami in Japan, economists said. That could show up in last month’s data, said Guatieri. “Growth is being damped a bit by supply disruptions,” he said.
Survey Results
Economists’ projections for housing starts, due at 8:30 a.m. from the Commerce Department, ranged from 500,000 to 600,000, the Bloomberg survey showed. Builders broke ground on 1.72 million houses a year on average in the decade before the recession began in December 2007. Starts slumped to a record low 554,000 in 2009.
Permits, a proxy for future construction, rose 0.9 percent to a 590,000 rate, according to the Bloomberg survey median.
Douglas Yearley Jr., chief executive officer at Toll Brothers Inc., the largest U.S. luxury-home builder, last week said the home-selling season from April through June, typically the busiest of the year, has been “disappointing” and that “people are still scared.”
Investors are more positive on the outlook for manufacturers than homebuilders. The Standard & Poor’s Supercomposite Machinery Index has climbed 6.3 percent since Dec. 31, compared with a 2 percent decline for the S&P Supercomposite Homebuilding Index.
Growing Exports
Manufacturing, which accounts for about 75 percent of industrial production, is likely to keep bolstering the world’s largest economy as an 18 percent drop in the dollar index from June 7, 2010, to April 29 made American-made goods more attractive abroad.
Exports jumped 4.6 percent in March, the biggest gain since 1994, to a record $172.7 billion. The gain reflected overseas demand for autos, chemicals and industrial machinery. Sales to customers in South and Central America reached a record, and purchases from clients in the European Union were the strongest since June 2008.
Caterpillar, the world’s largest construction-equipment maker, last month said it expects global economic growth this year of about 4 percent, with developing countries expanding by 6.5 percent and the U.S. growing by 3.5 percent.
The Peoria, Illinois-based company raised its full-year earnings forecast and said the outlook would have been higher had it not been for the March 11 earthquake in Japan.
“Our facilities in Japan were not damaged by the earthquake and tsunami, but many of our suppliers in Japan were,” Chief Executive Officer Doug Oberhelman said on an April 29 conference call. “As a result, we are experiencing sporadic production disruptions at many of our facilities around the world.”
Bloomberg Survey
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Housing Building Ind. Cap.
Starts Permits Prod. Util.
,000’s ,000’s MOM% %
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Date of Release 05/17 05/17 05/17 05/17
Observation Period April April April April
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Median 569 590 0.4% 77.6%
Average 566 585 0.4% 77.6%
High Forecast 600 610 0.9% 78.3%
Low Forecast 500 550 -0.4% 77.0%
Number of Participants 74 52 76 62
Previous 549 585 0.8% 77.4%
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4CAST Ltd. 580 565 0.2% ---
ABN Amro 574 --- 0.5% ---
Action Economics 570 580 0.4% 77.7%
Aletti Gestielle 560 600 -0.3% 77.2%
Ameriprise Financial 580 610 -0.3% 77.1%
Banesto 568 588 0.5% ---
Bantleon Bank AG 580 600 0.4% ---
Barclays Capital 575 --- 0.2% 77.5%
Bayerische Landesbank --- --- 0.5% 77.7%
BBVA 562 606 0.5% 77.8%
BMO Capital Markets 570 570 0.4% 77.7%
BNP Paribas 570 --- 0.5% 77.4%
BofA Merrill Lynch 575 590 0.6% 77.8%
Briefing.com 530 570 0.4% 77.5%
Capital Economics 590 --- 0.3% 77.5%
CIBC World Markets 550 570 0.5% 77.6%
Citi 570 570 0.2% 77.4%
ClearView Economics 580 600 0.5% 77.8%
Commerzbank AG 550 570 0.3% 77.6%
Credit Agricole CIB 560 590 0.5% 77.6%
Credit Suisse 550 570 0.4% 77.7%
Daiwa Securities America 560 --- 0.4% ---
DekaBank 580 590 0.4% 77.6%
Desjardins Group 590 600 0.5% 77.7%
Deutsche Bank Securities 575 590 0.4% 77.8%
Deutsche Postbank AG 560 --- 0.3% ---
Exane 580 --- 0.3% ---
Fact & Opinion Economics 575 --- 0.5% ---
First Trust Advisors 560 --- 0.3% 77.6%
FTN Financial 580 600 0.0% 77.4%
Goldman, Sachs & Co. 577 --- 0.5% 77.6%
Helaba 560 590 0.2% 77.4%
High Frequency Economics --- 600 0.6% 77.9%
Hugh Johnson Advisors 570 --- 0.3% 77.5%
IDEAglobal 580 600 0.9% 78.3%
IHS Global Insight 568 599 0.2% ---
Informa Global Markets 565 570 0.6% 77.8%
ING Financial Markets 575 595 0.5% 77.7%
Insight Economics 550 --- 0.5% 77.7%
Intesa-SanPaulo 575 575 0.5% 77.6%
ITG Investment Research 560 --- --- ---
J.P. Morgan Chase 570 580 0.5% 77.7%
Janney Montgomery Scott 565 580 0.5% 77.7%
Jefferies & Co. 565 560 0.0% 77.5%
Landesbank Berlin 550 565 0.9% 77.8%
Landesbank BW 575 590 0.6% 77.8%
Manulife Asset Management 560 600 0.5% 77.7%
Maria Fiorini Ramirez 550 --- --- ---
MET Capital Advisors 500 --- 0.3% ---
MF Global 565 580 0.1% 77.4%
Moody’s Analytics 563 572 0.3% 77.7%
Morgan Keegan & Co. 568 605 0.4% 77.6%
Morgan Stanley & Co. 575 --- 0.7% 77.8%
National Bank Financial 578 590 0.5% 77.8%
Natixis 576 --- 0.3% 77.5%
Nomura Securities 560 590 0.6% 77.8%
Nord/LB 560 580 0.4% 77.7%
OSK Group/DMG 550 --- 0.3% ---
Parthenon Group 568 595 0.7% 77.9%
Pierpont Securities 600 --- 0.3% 77.6%
PineBridge Investments 574 --- 0.3% ---
PNC Bank 583 590 0.2% 77.5%
Raiffeisenbank International --- --- 0.5% 77.8%
Raymond James 570 590 0.5% 77.8%
RBC Capital Markets 565 --- 0.5% 77.7%
RBS Securities Inc. 565 --- 0.4% 77.6%
Scotia Capital 560 580 0.2% 77.5%
Societe Generale 555 570 0.0% ---
Standard Chartered 560 590 0.4% 77.6%
State Street Global Markets 579 604 0.4% 77.6%
Stone & McCarthy Research 570 585 -0.4% 77.0%
TD Securities 550 550 0.6% 77.5%
UBS --- --- 0.2% 77.5%
University of Maryland 570 585 0.6% 77.9%
Wells Fargo & Co. 585 --- 0.3% 77.4%
WestLB AG 575 595 0.4% 77.6%
Westpac Banking Co. 532 585 0.2% ---
Wrightson ICAP 540 550 0.2% 77.5%
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To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
Industrial Production in U.S. Probably Grew
Marcos Issa/Bloomberg
Production at factories, mines and utilities increased 0.4 percent after growing 0.8 percent in March.
Production at factories, mines and utilities increased 0.4 percent after growing 0.8 percent in March. Photographer: Marcos Issa/Bloomberg
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