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Factories churned out more cars and appliances in December and homebuilders overcame inclement weather to begin work on more homes than projected, putting the U.S. economy on a strong footing heading into 2014.
Output at factories, mines and utilities climbed 0.3 percent to cap the strongest quarter since 2010, according to Federal Reserve figures issued Jan. 17 in Washington. Housing starts fell 9.8 percent to a 999,000 annualized rate following November’s 1.11 million pace that was the highest in six years, the Commerce Department reported.
Housing and manufacturing will be sources of strength for the economic expansion as gains in consumer spending propel demand for building materials, furniture and the newest model car. Another recent report showing employers had more openings in November than at any time in more than five years means hiring will probably rebound following a disappointing December gain.
“When I look at 2014, I’m looking at continued solid growth,” said Michael Carey, chief economist for North America at Credit Agricole CIB in New York, who was among the most accurate forecasters of the housing and production reports over the past two years, according to data compiled by Bloomberg. Housing “is going to be a contributor to growth in the next year, clearly, and the industrial sector as well.”
The median estimate of 83 economists surveyed by Bloomberg projected U.S. housing starts would drop to a 985,000 annualized rate. Estimates ranged from 925,000 to 1.08 million. The Commerce Department revised the November reading up to 1.11 million, which was the most since November 2007.
For all of 2013, builders began work on 923,400 homes, up 18.3 percent from the prior year and the most since 2007’s 1.36 million.
Permits for future U.S. housing projects declined, a sign activity may pause in early 2014, the Jan. 17 report also showed. Applications fell 3 percent to a 986,000 pace in December, less than the projected 1.01 million, according to the Bloomberg survey median.
Weather may have played a role in setting back some builders, auto dealers and retailers due to the coldest December since 2009. Snowfall was 21 percent above normal, according to weather-data provider Planalytics Inc.