US housing posts surprise surge
The Economic Times, March 18, 2009, Page 7
Wholesale Inflation Up 0.1%; Fed Likely To Continue To Keep Key Interest Rate At Near 0%
AP WASHINGTON
HOUSING construction posted a surprisingly large increase in February, bolstered by strength in all parts of the country except the West, which has been hardest hit by the current housing slump. The commerce department reported on Tuesday that construction of new homes and apartments jumped 22.2% in February compared with January, pushing total activity to a seasonally adjusted annual rate of 583,000 units.
Meanwhile, the labour department reported that wholesale prices edged up a slight 0.1% in February as a big drop in food costs offset a second monthly increase in energy prices.
While the surge in housing construction was far better than the continued decline economists had expected, the rebound is likely to be viewed as a temporary gain given all the problems the housing industry still faces.
Even with the big increase, construction activity remains 47.3% below where it was a year ago. The strength in February was led by a big increase in apartment construction, which can be highly volatile from month to month.
The 0.1% increase in wholesale inflation was much lower than the 0.8% surge in January and smaller than the 0.4% increase economists had expected. Compared with a year ago, wholesale prices are actually down 1.3%. Core inflation, which excludes energy and food, edged up 0.2% in February, only slightly higher than the 0.1% gain economists had expected. Core prices had risen 0.4% in January.
Only last summer, officials at the Federal Reserve had started to worry that a surge in energy costs could spread to other areas of the economy and boost inflation to unacceptable levels. But after the financial crisis struck in the fall, the Fed switched signals and is now aggressively fighting a deepening recession with no real threat of inflation.
The Economic Times, March 18, 2009, Page 7
Wholesale Inflation Up 0.1%; Fed Likely To Continue To Keep Key Interest Rate At Near 0%
AP WASHINGTON
HOUSING construction posted a surprisingly large increase in February, bolstered by strength in all parts of the country except the West, which has been hardest hit by the current housing slump. The commerce department reported on Tuesday that construction of new homes and apartments jumped 22.2% in February compared with January, pushing total activity to a seasonally adjusted annual rate of 583,000 units.
Meanwhile, the labour department reported that wholesale prices edged up a slight 0.1% in February as a big drop in food costs offset a second monthly increase in energy prices.
While the surge in housing construction was far better than the continued decline economists had expected, the rebound is likely to be viewed as a temporary gain given all the problems the housing industry still faces.
Even with the big increase, construction activity remains 47.3% below where it was a year ago. The strength in February was led by a big increase in apartment construction, which can be highly volatile from month to month.
The 0.1% increase in wholesale inflation was much lower than the 0.8% surge in January and smaller than the 0.4% increase economists had expected. Compared with a year ago, wholesale prices are actually down 1.3%. Core inflation, which excludes energy and food, edged up 0.2% in February, only slightly higher than the 0.1% gain economists had expected. Core prices had risen 0.4% in January.
Only last summer, officials at the Federal Reserve had started to worry that a surge in energy costs could spread to other areas of the economy and boost inflation to unacceptable levels. But after the financial crisis struck in the fall, the Fed switched signals and is now aggressively fighting a deepening recession with no real threat of inflation.
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