Two closely followed economic statistics were released today. First, Americans faced rising food and energy costs in September, with the consumer price index up 0.3 percent for the month, according to the Bureau of Labor Statistics. This is the third consecutive month of higher prices and, in many ways, it mirrors the producer price index release yesterday. Energy costs led the figures higher, with the energy component up 2 percent for the month. Food prices rose 0.4 percent.
The current inflation rate is 3.9 percent, which has been up significantly over the course of this year. In January, the year-over-year inflation rate was 1.7 percent. Meanwhile, the core inflation rate, which excludes food and energy costs, was up 0.1 percent for the month or 2 percent for the year. This has edged higher with each month this year; however, core inflation still remains modest overall.
Separately, the Census Bureau reported that housing starts rose significantly, from 572,000 in August to 658,000 in September. The bulk of this gain came from multi-family unit starts, which rose from 154,000 to 233,000 for the month. Single-family housing starts were also up, but more modestly. Housing permits were down from 625,000 to 594,000. Completions rose 2.1 percent for the month to 647,000 homes.
These numbers provide a welcome respite in a sector that has struggled mightily over the past few years. While housing starts growth has been primarily in the multi-family sector, but this is still a positive for the overall economy and for manufacturers. Housing starts figures have been unable to consistently break and maintain the psychological barrier of 600,000 homes, so this strong movement forward will be seen as a positive for the homebuilding outlook.
While weaknesses persist for the sector and threats to the larger economy might curtail this outlook, we will take any good sign that comes our way.
Chad Moutray is chief economist, National Association of Manufacturers.