Economy Watch: New-Home Starts Take Dip
By Dees Stribling, Contributing Editor
Housing starts took a dip in March, according to the Census Bureau on Tuesday. Work began on new single-family and multi-family properties at an annualized rate of 654,000 units, which was 5.8 percent below the revised February figure of 694,000 units. But the March 2012 figure is 10.3 percent above the 593,000 units started in March 2011.
Single-family housing starts in March were at an annualized rate of 462,000 units, only 0.2 percent below the February rate of 463,000 units. Thus most of the overall monthly drop in housing starts was due to the volatile multifamily housing sector, which saw 178,000 units begin in March, compared with 231,000 units in February.
Permits were up in March, but true to its volatile nature, multi-family accounted for the upward shift. Overall, permits were up 4.5 percent compared with February to an annualized rate of 747,000 units. But only 462,000 of those were for single-family homes, representing a drop of 3.5 percent compared with the annualized rate of 479,000 for single-family permits in February.
IMF Revises Growth Forecast Upward
The International Monetary Fund raised its forecast of global economic growth on Tuesday, something the organization hasn’t done in more than a year, though it said that the improvements are still “very fragile.” The world economy, the IMF predicts, will expand 3.5 percent in 2012, not the 3.3 percent it predicted in January.
Compared with most of the rest of the developed world, the U.S. economy has an edge, according to the IMF, which is predicting 2.1 percent growth this year and 2.4 percent in 2013. By contrast, the euro zone is fated to contract 0.3 percent in 2012. But at least that’s better than the 0.5 percent contraction the IMF predicted back in January. The organization is also predicting 8.2 percent growth for China for the year, which is considered a mite sluggish for that economy.
“Improved activity in the United States during the second half of 2011 and better policies in the euro area in response to its deepening economic crisis have reduced the threat of a sharp global slowdown,” the IMF said in its report. “Weak recovery will likely resume in the major advanced economies, and activity is expected to remain relatively solid in most emerging and developing economies.”
Investors Still Want Spanish Debt
For the moment, investors still seem interested in Spanish debt, with the country selling 3.2 billion euros of 12- and 18-month bills on Tuesday, more than anticipated. But Spain is having to pay more to these investors than at any time this year: 2.623 percent for the 12-month debt, compared with 1.418 percent about a month ago; and 3.11 percent on the 18-month debt, compared with 1.711 percent in March. Euro-zone investors thus are still nervous, but not so nervous that they’re willing to bypass higher returns.
Wall Street seemed to respond to the favorable reports from the IMF and Spain, with the Dow Jones Industrial Average jumping 194.13 points, or 1.5 percent. The S&P 500 and Nasdaq did even better, gaining 1.55 percent and 1.82 percent, respectively.