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Data signal US economy still sluggish
By Lucia Mutikani and Glenn Somerville |
November 18, 2010, Thursday
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Print Edition
Print Edition
CONSUMER inflation in the United States was subdued in October and new home building slumped to its lowest level in 18 months, further supporting the Federal Reserve's move to boost the sluggish economy through additional monetary easing.
The data yesterday could help to ease criticism of the Fed's unpopular November 3 decision to inject more money into the economy through purchases of US$600 billion worth of government debt.
The Labor Department said its Consumer Price Index rose 0.2 percent last month after edging up 0.1 percent in September and below economists' expectations for a 0.3 percent gain.
Excluding volatile food and energy prices, core CPI was flat for a third straight month in October and the increase from a year ago of 0.6 percent was the smallest since records started in 1957, the department said.
Economists polled by Reuters had expected core CPI to edge up 0.1 percent in October and the annual rate to rise 0.7 percent after a 0.8 percent hike in September.
"Very much in line with the Fed policy initiatives suggesting that inflation right now is not a concern," said Lindsey Piegza, an economist at FTN Financial in New York. "This again gives them momentum to support their policies amid rising criticism."
In a separate report, the Commerce Department said housing starts plummeted 11.7 percent to a 519,000 annual rate from a downwardly revised 588,000 annual rate in September.
It was the weakest starts rate since 477,000 in April 2009 when the economy was still struggling with the impact of the 2007-2008 financial crisis.
Economists surveyed by Reuters had anticipated a starts rate in October of 600,000 - far higher than the actual outcome.
Permit applications for new building edged up to 550,000 last month from an upwardly revised 547,000 in September, potentially an indication that builders hope for better times in the future.
The data yesterday could help to ease criticism of the Fed's unpopular November 3 decision to inject more money into the economy through purchases of US$600 billion worth of government debt.
The Labor Department said its Consumer Price Index rose 0.2 percent last month after edging up 0.1 percent in September and below economists' expectations for a 0.3 percent gain.
Excluding volatile food and energy prices, core CPI was flat for a third straight month in October and the increase from a year ago of 0.6 percent was the smallest since records started in 1957, the department said.
Economists polled by Reuters had expected core CPI to edge up 0.1 percent in October and the annual rate to rise 0.7 percent after a 0.8 percent hike in September.
"Very much in line with the Fed policy initiatives suggesting that inflation right now is not a concern," said Lindsey Piegza, an economist at FTN Financial in New York. "This again gives them momentum to support their policies amid rising criticism."
In a separate report, the Commerce Department said housing starts plummeted 11.7 percent to a 519,000 annual rate from a downwardly revised 588,000 annual rate in September.
It was the weakest starts rate since 477,000 in April 2009 when the economy was still struggling with the impact of the 2007-2008 financial crisis.
Economists surveyed by Reuters had anticipated a starts rate in October of 600,000 - far higher than the actual outcome.
Permit applications for new building edged up to 550,000 last month from an upwardly revised 547,000 in September, potentially an indication that builders hope for better times in the future.
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