US: Home Construction diving...

Home starts dive to 14-year low; consumer prices up

WASHINGTON - HOME construction starts in the United States fell last month to their lowest level in more than 14 years.

Meanwhile, consumer prices in the US rose at the sharpest rate in four months, separate reports showed yesterday.

'We knew housing was weak, but these numbers show another pretty big drop, so the sector remains soft overall,' said TS Securities senior currency strategist Shaun Osborne in Toronto.
Yesterday, US stocks rose in early trade. The Dow Jones Industrial Average was up 61.29 points, or 0.44 per cent, at 13,974.23. The Nasdaq Composite Index climbed 31.03 points, or 1.12 per cent, to 2,794.94.

US home construction starts fell 10.2 per cent last month, while building permit activity, a sign of future construction plans, also dropped to the lowest level since mid-1993, a US Commerce Department report showed.

It said housing starts set an annual pace of 1.191 million units last month, lower than the 1.285 million units expected by economists. It was the slowest pace for housing starts since March 1993.

'There is no end in sight,' said Mr Kurt Karl, the chief US economist with Swiss Re. 'The builders didn't realise how many cancellations they are going to face. If we hit the one million start range, it's consistent with recessions in the past. And we are heading in that direction.'

US consumer prices rose at the sharpest rate in four months as energy costs picked up after three months of decline. The US Labour Department said the Consumer Price Index, the most broadly used gauge of inflation, rose at a 0.3 per cent rate last month after declining 0.1 per cent in August.

The September rise in the overall index was slightly ahead of economists' forecast for a 0.2 per cent rise and was the largest since a 0.7 per cent jump in May.