- Chris Rupkey, MUFG Union Bank
US homebuilding activity dropped more than expected last month amid the unusually warm weather and weaker manufacturing activity, official figures revealed on Tuesday. The US Department of Commerce reported that housing starts fell 6.8% to a seasonally adjusted rate of 1.22M, as construction of single-family homes in the Midwest posted the largest decline since 2014. Meanwhile, market analysts anticipated a slighter drop to a 1.25M unit rate in March, following the preceding month's upwardly revised 1.30M unit rate. On an annual basis, housing starts were up 9.2%. Data also showed that building permits climbed to a 1.26M unit rate in March, compared to the previous month's upwardly revised 1.22M unit rate, whereas analysts expected a rise to 1.25M unit rate. Separately, the Federal Reserve reported that manufacturing output plunged 0.4% in March, driven by a 3.0% decrease in the motor vehicle and part sector. On a yearly basis, manufacturing output advanced 2.7% in the Q1 of 2017. Both reports raised concerns over the Fed postponing its second rate hike this year. Moreover, the data suggested that the US economy performed weaker than expected in the Q1. Following Tuesday's releases, the US Dollar hit its three week low against a basket of major currencies.
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