Manufacturing Output Rises, Housing Starts Fall

By John S. McClenahen The output of U.S. factories increased 0.9% in May as their operating rate rose by half a percentage point to 76.4%, the Federal Reserve Board reported on June 16. "Excluding high-tech and motor vehicles, manufacturing output surged an impressive 1.1% [in May], the largest monthly increase to date this year," notes Jerry J. Jasinowski, president of the National Association of Manufacturers, Washington, D.C. "There is no doubt that the manufacturing recovery is now durable, deep and diffuse." Meanwhile, overall industrial production, which includes mines and utilities in addition to manufacturing, also rose 1.1% last month, as capacity utilization increased by seven-tenths of a percentage point to 77.8%. New residential construction did not fare as well, however. Starts for privately owned housing were at a seasonally adjusted annual rate of 1.967 million in May, 0.7% below the revised April figure of 1.981 million, according to data jointly released June 16 by the U.S. Commerce Department and the U.S. Department of Housing and Urban Development. "Starts are generally trending lower from super-high levels touched late last year, but the slide remains slow," observes UBS Investment Research, New York.

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