CPI Advances 0.3% as Expected, Housing Starts Make 5.6% Jump
An INTERACTIVE JOURNAL News Roundup
WASHINGTON -- Consumer prices rose 0.3% in July after two months
of no change, matching Wall Street estimates.
Meanwhile, construction starts of new homes climbed a
stronger-than-expected 5.7% in July.
The consumer-price index's gain was boosted by the biggest increase in
energy prices since April, the Labor Department said Tuesday. Core
consumer prices, which exclude the volatile food and energy components,
rose a more benign 0.2% during the month, compared with 0.1% in June.
The numbers are likely to soothe bond investors, who have feared that the
price increases might have been greater and prompted drastic action on
interest rates from the Federal Reserve Board.
The latest report on construction starts of new homes wasn't as
comforting. Housing starts rebounded in July, shaking off sluggishness from
the prior month and suggesting higher mortgage rates have yet to cut down
on demand.
The Commerce Department said housing starts climbed 5.7% to a 1.66
million annual rate. June starts were unrevised at a 1.57 million annual rate.
Because of a slight upward revision to May, June's decrease was revised
to 5.8% from the previously reported 5.6% fall.
July construction permits, however, showed some small signs of weakness,
falling 0.5% to a 1.632 million yearly pace. Permits are considered an
indicator of future home building activity.
Fed policy makers will likely not welcome the report. They have long been
worried that the economy has been growing at a rate incompatible with
low inflation. The starts data would seem to confirm reports in the
so-called "beige book" released last week of labor and materials shortages
in the interest rate-sensitive housing sector.
The numbers were stronger than analysts had predicted. Economists had
called for a slight increase to a 1.65 million annual pace. |
