U.S. Housing Starts, Industrial Production: Economic Takeaways

  • New single-family home construction strongest since 2008
  • Warm temperatures subdued utility use, manufacturing stagnated

What you need to know about Wednesday’s U.S. economic data:


  • Rose 10.5 percent to a 1.17 million annualized pace, faster than forecast
  • Single-family home starts advanced 7.6 percent to a 768,000 pace, the most since January 2008
  • Building permits climbed 11 percent to a 1.29 million rate
  • Applications for construction of one-family homes increased to the highest level since December 2007; multifamily permits reached five-month high

The Takeaway: The firming in work on single-family homes, the biggest part of the market, bodes well for the industry and the economy since those projects tend to contribute more to growth by stimulating sales of appliances and electronics. The surge in permits for multifamily projects points to further gains in this market in coming months, while single-family construction may cool from last month’s almost eight-year high. The strength in residential real estate is helping the economy make up for the slowdown in manufacturing.


  • Fell 0.6 percent, most since March 2012, after 0.4 percent decrease
  • Manufacturing production was unchanged, mining dropped 1.1 percent
  • Utility output slumped 4.3 percent, the most since March 2007, as warmer weather reduced demand for home heating
  • Output at factories up 0.9 percent from November 2014, weakest 12-month gain since February 2014

The Takeaway: Call it the El Nino effect. The steep decline in utilities output, as warm weather embraced much of the U.S., implies less household spending on services in the fourth quarter, according to economists at Barclays, who trimmed their tracking estimate for GDP to 1.7 percent from 1.9 percent. At the same time, lower heating bills may encourage consumers to open up their wallets a little more as the holiday-shopping season draws to a close. The Federal Reserve report also showed stagnant manufacturing production as factories contend with still-high inventory levels and tepid overseas demand. With the dollar continuing to climb, export flows will probably be slow to improve and weigh on U.S. manufacturing in early 2016.

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