WASHINGTON – Gains in manufacturing are helping power the U.S. out of the winter doldrums, while homebuilding shows signs of lagging behind.
Factory production climbed 0.5 percent in March after a revised 1.4 percent surge in February that marked the biggest gain in almost four years, figures from the Federal Reserve showed on Wednesday in Washington. Housing starts rose 2.8 percent to a 946,000 annualized rate last month, falling short of the median forecast of economists surveyed by Bloomberg, according to Commerce Department data.
Assembly lines are accelerating as retailers restock inventory after American consumers, braced by gains in hiring, return to shopping malls and auto dealerships following unusually cold temperatures at the start of the year. The housing industry has been challenged by rising mortgage rates, still-tight credit and a lack of available land, which means additional strength will be slow to develop.
“There’s a lot of pent-up demand among consumers and businesses, and factories have to produce those goods,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. “Housing is still in recovery mode. We have a long way to go before we get to expansion in this sector.”
Stocks rose, with the Standard & Poor’s 500 Index climbing a third day, on the gain in production and as Yahoo! Inc. earnings topped estimates. The S&P 500 rose 0.4 percent to 1,850.03 at 10:51 a.m. in New York.
The Fed’s report also showed total output, including factories, mines and utilities, climbed 0.7 percent last month after a revised 1.2 percent increase in February.
The median forecast in a Bloomberg survey of 79 economists called for a 0.5 percent rise. Estimates ranged from no change to an increase of 1 percent after a previously reported 0.6 percent increase. Manufacturing accounts for about 12 percent of the economy.
The report is consistent with data from the Institute for Supply Management that showed manufacturing accelerated in March, driven by production and orders.