Maybe the U.S. economy’s strength this winter wasn’t just weather-related after all.
Home construction is near a three-year high. And factory output has risen in three of the year’s first four months.
The data released Wednesday suggest growth in the April-June quarter is off to a good start, helped by falling gas prices and solid hiring gains. Fears of a spring slump are easing.
“It’s all very encouraging,” said Paul Ashworth, chief U.S. economist at Capital Economics. “Things look good at the moment.”
Builders broke ground in April at a seasonally adjusted annual pace of 717,000 homes, the Commerce Department said. That nearly matches January’s pace, the best since October 2008.
Construction rose for both single-family homes and apartments.
Some economists have noted that a warm winter led companies to move up some hiring and accelerate other activity _ including homebuilding _ that normally wouldn’t occur until spring. That gave the appearance that the economy had strengthened in January and February and weakened in March.
But Ashworth noted that the overall trend in housing starts has been running at roughly the same annual pace _ approximately 700,000 _ over the past six months. That’s 100,000 more on average than the pace for the previous six months.
Ashworth said the higher level suggests demand is increasing and the mild winter had less effect than some economists had thought.
“We expect starts to strengthen further this year,” Ashworth wrote in a note to clients.
Even with the gains, the rate of construction for all homes is only about half the 1.5 million annual pace that most economists consider healthy. But the increase, along with rising builder confidence and stronger job growth, is a sign that the home market may finally be starting to recover nearly five years after the housing bubble burst.
Single-family home construction is now 39 percent higher than its recession low. And developers are also anticipating more sales. Permits for single-family home construction rose 2 percent last month.
The growth in single-family home construction is important because those homes make up roughly 70 percent of the market. Since the recession, homeownership has declined while demand for apartments has surged.
Economists say continued job gains could quickly reverse that trend.
“Homebuilders are reporting stronger demand,” Ian Shepherdson, an economist at High Frequency Economics, said in a note to clients. “And while rental demand means the multi-family sector is much stronger than single family, that will change as the labor market improves further.”
U.S. manufacturing, one of the strongest areas of the economy since the recession ended nearly three years ago, also rebounded in April after a March lull.
Factory output is now 18.3 percent higher than its low hit in June 2009, the month the recession ended. It’s only 6.1 percent below its pre-recession peak.
Factories are busier in part because automakers are selling more cars and trucks. Half of April increase in factory output reflected a 3.9 percent jump in the production of motor vehicles and parts. That was the fifth straight gain at auto plants.
Production also rose at a wide range of companies in April, from makers of computers and electronics to aerospace and furniture factories.
The modest gain shows that U.S. manufacturers aren’t cutting back in the face of Europe’s financial crisis and slower growth in China.
Faster output at U.S. factories has been a key reason employers have added 1 million jobs over the past five months. It’s also helped lower the unemployment rate from 9.1 percent in August to 8.1 percent last month.
Manufacturing companies have added 167,000 jobs in that stretch. That’s roughly 17 percent of the job gains, even though manufacturing represents less than 10 percent of the economy.
More jobs, along with record-low mortgage rates and low home prices, are making home buying more attractive to some Americans.
And gas prices have dropped in the past month after surging earlier this year. So consumers have more money for other purchases. The average price of a gallon of gas was $3.73 on Wednesday, according to AAA. That’s 18 cents less than a month ago.
Some hurdles to a smooth recovery remain: Builders are struggling to compete with deeply discounted foreclosures and short sales. (Short sales occur when a lender accepts less than what’s owed on a mortgage.)
And many would-be buyers are struggling to qualify for home loans or can’t afford larger down payments that banks require.
Though new homes represent just 20 percent of the overall home market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
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U.K. consumer confidence dropped last month and may decline further after the economy slipped into a double-dip recession, according to Nationwide Building Society.
An index of sentiment fell to 44 from 53 in March, the Swindon, England-based customer-owned lender said in an e-mailed report today. A gauge of consumers
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Stocks are closing slightly higher as investors weigh news of higher corporate profit against disappointing economic news.
The Dow Jones industrial average rose 24 points to 13,228 at the close Friday. The Standard & Poor’s 500 edged up three points to 1,403. The Nasdaq composite rose 19 points to 3,069.
Amazon jumped 16 percent after the online retailer reported a big increase in shipments.
The government reported U.S. economy grew at annual rate of 2.2 percent, below the 2.5 percent expected.
European stock markets rose as investors shrugged off a second downgrade this year by S&P of Spain’s debt. Spain also reported its unemployment rate rose to nearly 25 percent, its highest in 18 years.
Spain’s IBEX rose 1.7 percent, France’s CAC-40 1.1 percent and Germany’s DAX 0.9 percent.
Signed contracts to buy U.S. homes rose more than forecast in March as low interest rates drew buyers back into the market.
The index of pending home purchases rose 4.1 percent to 101.4, the highest level since April 2010, after a 0.4 percent gain in February that was revised from a previously estimated 0.5 percent drop, the National Association of Realtors reported today in Washington. The median forecast of 43 economists surveyed by Bloomberg News called for a 1 percent rise in the measure, which tracks contracts on previously owned homes.
An improved labor market and mortgage rates near historic lows are helping to stabilize housing. At the same time, the industry remains the economy
Record Chinese oil imports are emptying the Atlantic Ocean of very large crude carriers and their 2 million-barrel cargoes, driving a rebound in rates for the smaller vessels left to supply the U.S. from West Africa.
Suezmaxes, each holding 1 million barrels, will earn an average of $18,750 a day this quarter, 45 percent more than now, according to the median of six analysts surveyed by Bloomberg. That
Regulators are proposing that food companies that want to use tiny engineered particles in their packaging may have to provide extra testing data to show the products are safe.
The Food and Drug Administration issued tentative guidelines Friday for food and cosmetic companies interested in using nanoparticles, which are measured in billionths of a meter. Nanoscale materials are generally less than 100 nanometers in diameter. A sheet of paper, in comparison, is 100,000 nanometers thick. A human hair is 80,000 nanometers thick.
The submicroscopic particles are increasingly showing up in FDA-regulated products like sunscreens, skin lotions and glare-reducing eyeglass coatings. Some scientists believe the technology will one day be used in medicine, but the FDA’s announcement did not address that use.
The draft guidance suggests the FDA may require food companies to provide data establishing the safety of any packaging using nanotechnology.
Under longstanding regulations, companies aren’t required to seek regulatory approval before launching products containing established ingredients and materials, such as caffeine, spices and various preservatives.
But FDA officials said Friday that foods and packaging containing nanoparticles may require more scrutiny.
“At this point, in terms of the science, we think it’s likely the exemption does not apply and we would encourage folks to come in and talk to us,” said Dennis Keefe, director of FDA’s office of food additive safety payday loans for bad credit.
Keefe said companies are studying whether nanoparticles can reduce the risk of bacterial contamination in certain foods. He said the agency is aware of just one food package currently on the market that uses nanoparticles but did not identify it. He said more are expected in coming years.
The FDA has previously stated its position that nanotechnology is not inherently unsafe; however, materials at the nano scale can pose different safety issues than do things that are far larger.
“This is an emerging, evolving technology and we’re trying to get ahead of the curb to ensure the ingredients and substances are safe,” Keefe said.
In a separate guidance, the FDA laid out suggestions for the use of nanotechnology in cosmetics, a practice which has been in use since the 1990s. Nanoparticles are used in skin moisturizer, mineral make up and other cosmetics.
The FDA has less authority over cosmetics than food additives. Generally, the FDA does not review cosmetics before they launch, and companies are responsible for assuring the safety of their products.
The FDA will take comments on both proposals for 90 days. There is no deadline for finalizing the documents.
While the stock market put up its best first-quarter performance in over a decade, the first three months of 2012 weren’t as hot for Corporate America.
Analysts are forecasting a 0.1% drop in first-quarter earnings for companies in the S&P 500 (), compared with a year earlier, according to FactSet. While that’s not exactly a major decline, it would mark the end of a nine-quarter winning streak.
And excluding Apple (, Fortune 500)’s always-impressive financial performance, the outlook is even more downbeat, with S&P 500 earnings on track for a 1.6% decline.
The materials sector is expected to post the worst performance, with earnings falling 14.5%. The sector will be in the spotlight Tuesday, when aluminum giant Alcoa (, Fortune 500) reports results, marking the unofficial start of the quarterly earnings season.
Google (, Fortune 500), JPMorgan Chase (, Fortune 500) and Wells Fargo (, Fortune 500) are also on tap to report this week.
One reason earnings growth is beginning to stagnate is sheer math.
When company balance sheets were recovering from the depths of the recession, earnings were growing by double-digits. But almost three years into the recovery, year-over-year improvements are more difficult to deliver.
Sell in April and hide under the table?
On top of that, companies are facing some tough headwinds, too.
High energy costs are the biggest factor to blame for the earnings growth slowdown, according to analysts. Oil priced rose more than 4% during the quarter, sparking a 20% spike in gas prices.
While all 10 sectors of the S&P 500 are expected to post sales growth for the first quarter, there are at least seven that may have had trouble converting that to earnings growth, analysts said, reflecting the strain of higher input costs.
In fact, the number of companies projected to deliver higher sales but a decline in profit stands at 104, the highest since the third quarter of 2009, according to FactSet. Consumer discretionary and consumer staples make up a big bulk of those companies, since higher fuel costs typically weigh significantly on those companies cash advance loan no fax.
For example, General Mills (, Fortune 500), which reported earnings for the three-month period ended Feb. 26, said the uptick in input costs is pressuring its profit margins. Cruise line operator Carnival Corp. () has also been expressing concern about higher fuel costs.
Sluggish global economic growth is also expected to have impacted earnings. Europe’s economies are struggling with massive debt and severe austerity measures, while growth out of emerging economies, particularly China, is also slowing.
For the three months ended Jan. 31, Hewlett-Packard (, Fortune 500) said sales out of Brazil, Russia, India and China dropped 13%, compared with a year earlier.
Though first-quarter earnings results are lining up to be unimpressive, investors won’t put much stock into them. Rather, they’ll be tuned more closely into what company executives have to say about future quarters.
"We want to know what executives are seeing from Europe and China, and what their expectations are going forward," said Rex Macey, chief investment officer of Wilmington Trust Investment Management.
Europe’s still a thorn, but ‘out of crisis mode’
In particular, Macey said he’ll be looking at companies like construction equipment maker Caterpillar (, Fortune 500), which has significant exposure to China, as well as multinational consumer giants like Coca-Cola (, Fortune 500).
Analysts are hopeful that earnings will improve over the course of the year, as Europe’s economy stabilizes and China’s easing efforts help spur growth.
Second-quarter earnings are expected to rise by 7%, according to FactSet, while third-quarter profits are expected to grow 4.7%. Double-digit growth is expected to return in the fourth quarter.
A fairly rosy manufacturing survey in the U.S. helped shore up markets Monday following a volatile day when conflicting figures from around the world raised questions over the state of the global economic recovery.
At certain times of the day, the more optimistic investor found reasons to be hopeful _ while, at other times, the pessimist had the upper hand.
The conflicting signals were particularly evident in China. One manufacturing survey eased fears over the scale of the slowdown in the world’s second largest economy while another indicated that the downturn was getting worse.
An equivalent report about the state of the sector in Europe reinforced fears over a recession in the 17-country eurozone. Figures showing that unemployment in the 17 countries that use the euro rose to 10.8 percent in February, its highest level since the euro was launched in 1999, reinforced recession concerns.
However, a better-than-expected monthly Institute for Supply Management survey about the manufacturing sector in the U.S. helped lift markets into the Wall Street session. The institute’s main index for March rose to 53.4 in March, up from 52.4 in the previous month and just ahead of expectations for a more modest increase to 53.0.
“The ISM data largely fits with the global picture that is fairly flat, with some loss of any recovery momentum in the euro area,” said Alan Ruskin, an analyst at Deutsche Bank.
In Europe, the FTSE 100 index of leading British shares was up 1.85 percent at 5,874 while Germany’s DAX rose 1.5 percent to 7,056. The CAC-40 in France was 1.1 percent higher at 3,462. The euro though remained under pressure, trading 0.27 percent lower at $1.3325.
On Wall Street, the Dow Jones industrial average was up 0.5 percent at 13,279 while the broader Standard & Poor’s 500 index was 0.83 percent lower at 1,420.
In the first quarter of the year, stock markets around the world posted solid gains as Europe’s debt crisis seemingly eased following a big liquidity injection from the European Central Bank and a raft of forecast-busting U.S. economic figures.
However, Kathleen Brooks, research director at Forex.com, said stocks will face bigger headwinds in the second quarter as investors concentrate on growth and the future direction of central bank policy.
“While stocks won’t fall precipitously, expect some pretty big pullbacks especially in European markets,” said Brooks.
Economic indicators around the world will be the primary point of interest in the markets this week. The U.S. will increasingly attract attention in the run-up to Friday’s nonfarm payrolls figures for March.
Earlier in Asia, stocks generally edged higher.
Though markets in mainland China were closed for a public holiday, the main indexes elsewhere started the second quarter positively. Japan’s Nikkei 225 index gained 0.3 percent to close at 10,109.87 despite businesses remaining pessimistic in the central bank’s latest quarterly “tankan” survey. Hong Kong’s Hang Seng fell 0.2 percent to 20,522.26.
Oil prices started the day tracking European stocks lower, but the benchmark New York rate rose $1.43 later on in the day to $104.35 a barrel.
____
Pamela Sampson in Bangkok contributed to this report.
Prime Minister Mario Monti’s government has approved new labor rules hotly contested by Italy’s major trade union confederation.
Monti refused to weaken measures making it easier to fire workers despite political opposition and threats of a nationwide general strike.
The prime minister instead pledged to monitor for abuses of the new rules. But he added that a court could no longer force companies to rehire workers laid off for economic reasons, even if the employer’s case is not proven in court. A judge can instead order damages no faxing payday loan.
The reform is much broader _ including a new unemployment compensation system and limits on temporary workers to encourage permanent employment.
The measures approved Friday by the Cabinet must still pass Parliament, where some politicians say they will seek changes.
Britain is proposing to revive
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