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Housing Starts Fell in May, PPI Drops Down, Manufacturing Strong

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In further signs of a fitfully modest recovery, the economic data for Wednesday, June 16, showed a big drop in home construction and falling producer prices for wholesalers, but a rise in manufacturing activity.

Single-family housing starts in May stood at a rate of 468,000, 17.2% below the revised April figure of 565,000, the U.S. Census Bureau and the Department of Housing and Urban Development jointly announced.

Building permits for single-family houses in May were 9.9% below the revised April figure, at a rate of 438,000 compared to 486,000 in the previous month. Single-family housing completions in May were 7.8% below the April rate, at 507,000 compared to 550,000.

The housing numbers, which disappointed analysts’ expectations, took a hit because a federal tax credit of up to $8,000 for first-time home buyers ended on April 30.

Meanwhile, the U.S. Bureau of Labor Statistics’ May producer price index (PPI) for finished goods moved down 0.3%, signaling that inflation pressures stayed low last month. The index, a key indicator of inflation that shows how much manufacturers and wholesalers pay for goods, fell along with energy and food prices.

From May 2009 to May 2010, the producer-price index rose 5.3%, slowing from an annual increase of 5.5% registered in April. The core producer-price index rose 1.3% year-over-year in May.

“This was the second consecutive month of slowing year-over-year advances after a 6.0% increase for the 12 months ended March 2010,” the Bureau said in its release.

Manufacturing, on the other hand, showed strength as industrial production accelerated in May, according to the Federal Reserve.

For its third straight monthly gain, industrial output increased. Overall industrial production in May rose 1.2%, which was slightly above expectations for a 1% increase. April’s number was revised to 0.7% from 0.8%.

Read a story about last month’s housing starts and producer prices from the archives of


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