U.S. housing starts data underperforms; jobless claims rise
By Lucia Mutikani
WASHINGTON (Reuters) - U.S. housing starts rose far less than expected in March and factory activity in the mid-Atlantic region grew modestly this month, suggesting the economy could struggle to rebound from a soft patch hit in the first quarter.
The economy stumbled at the start of the year under the weight of a harsh winter, a resurgent dollar, weaker global growth and a now-resolved labor dispute at the West Coast ports.
There are expectations growth will rebound in the second quarter, but Thursday's lukewarm data suggest the momentum will probably not be strong enough for the Federal Reserve to start raising interest rates before September.
"The economy's tepid recovery in March makes it very unlikely the Fed signals a June rate hike at the April meeting," said Steve Blitz, chief economist at ITG Investment Research in New York. "If housing doesn't recover enough this spring, a September rate hike likely becomes equally improbable."
Groundbreaking increased 2.0 percent to a seasonally adjusted annual pace of 926,000 units, the Commerce Department said. That left the bulk of February's decline, which had been blamed on bad weather, intact.
While starts for single-family homes rose, the gains made only a small dent into the prior two months' losses. Groundbreaking for the multifamily segment fell.
Economists had forecast groundbreaking rising to a 1.04 million-unit pace in March.
In a separate report, the Philadelphia Federal Reserve Bank said its business activity index rose to 7.5 this month from 5.0 in March. A measure of orders for manufactured goods fell to its lowest level since May 2013, while shipments remained in contraction territory despite some improvement. Continued...