After a week of bad news, a round of relatively positive U.S. economic data buoyed the markets on Tuesday, August 17, with July’s housing starts, producer price index, and industrial production numbers all posting increases and only housing permits showing a decrease.
New home starts gained 1.7%, according to the Commerce Department’s new residential construction statistics for July, at a seasonally adjusted annual rate of 546,000 versus the revised June estimate of 537,000. Analysts had expected a rate closer to 560,000 units. Permits, meanwhile, dropped to their lowest point in 14 months, down 3.1% to a rate of 565,000 versus a revised June rate of 583,000.
“Home builders remain very cautious, marginally increasing housing starts in July as they trimmed the number of permits for new construction,” wrote economists with Pittsburgh-based PNC Financial Services in an analyst note.
They added that completions dropped precipitously in July, down 32.8%, “as builders took a step back to assess demand in the post-home-buyers’-tax-credit era.” The federal government’s tax credit for first-time home buyers expired April 30, and the housing market has shown persistent weakness as the credit’s effects have worn off.
Better news came from the U.S. Department of Labor, which reported that the July producer price index (PPI) for finished goods rose 0.2%, seasonally adjusted. The slight rise compares to a 0.5% price drop in June and a 0.3% drop in May, which had market watchers fearing deflation.