Other data released on Tuesday suggested that the housing market recovery was losing momentum, even though builders started work on new homes at an annual rate of more than one million units for the first time since June 2008.
“For the Fed, it’s business as usual,” said Millan Mulraine, senior economist at TD Securities. “There is not likely to be an acceleration in growth momentum that would cause them to shift their policy stance anytime soon.”
The Labor Department said its Consumer Price Index edged down 0.2 percent last month as gasoline prices tumbled, unwinding some of February’s 0.7 percent increase. Economists expected a flat reading.
Underscoring the benign inflation environment, consumer prices rose just 1.5 percent in the 12 months through March — the smallest increase since July. Prices increased 2 percent year-on-year in February.
Stripping out volatile energy and food costs, the so-called core C.P.I. was up only 0.1 percent after gaining 0.2 percent in February. That lowered the 12-month increase to 1.9 percent in March from 2.0 percent in February.
A separate report from the Fed showed that production at the nation’s factories decreased 0.1 percent after advancing 0.9 percent in February. The decline was fairly broad-based, with output dropping for primary metals and electronics. Automobile assembly, however, increased.
Despite the factory weakness, overall industrial production rose 0.4 percent last month, mainly because of a jump in utilities’ output.
Economic data for January and February have suggested growth accelerated in the first quarter after activity almost stalled in the final three months of 2012.
But in a replay of the previous two years, the economy appears to have hit a speed bump at the end of the quarter, with data ranging from employment to retail sales and manufacturing weakening significantly in March.
Much of the weakness is blamed on higher taxes and deep government spending cuts put in place in Washington.
“We definitely see the second quarter slowing from the first in terms of overall growth across many of the sectors. Obviously, the drag from fiscal policy is playing into this a little bit,” said Erik Johnson, senior United States economist at IHS Global Insight.
A third report from the Commerce Department showed that housing starts rose 7.0 percent last month to a 1.04 million-unit annual rate, the highest in nearly five years.
The increase in home building was driven by the volatile multifamily sector, while groundbreaking for single-family units fell. In addition, permits for future construction tumbled 3.9 percent — reversing February’s gain.
That suggested a slowdown in housing activity, coming on the heels of a report on Monday that showed a third consecutive decline in homebuilders’ confidence in April.
“The decline in single starts and permits is consistent with recent hints the housing recovery has lost some momentum,” said David Sloan, senior economist at 4Cast Ltd.
Article source: http://www.nytimes.com/2013/04/17/business/economy/weakening-seen-in-economic-growth-data.html?partner=rss&emc=rss