Housing Starts Drop
Last week, the U.S. government released data showing that the seasonally adjusted annual rate of housing starts for May dropped 2% from April. Compared to last November, starts are off nearly 6%. Looking at the data on an annual basis reveals that housing starts are almost one-quarter lower compared to a year earlier.
Alex Beuzelin, Senior Market Analyst with Ruesch International is quoted as saying, “The housing starts number was not as bad as anticipated and in addition the permits component came out stronger than expected. On balance while the report does not yet make the case we are out of the woods, it does suggest that the inventory drawdown is running its course and points to stabilization in housing. Simply put, it will tend to temper some of the downside risks from the housing sector which reinforces the view that the Fed will not need to cut rates. This supports the U.S. dollar.”