US economy gathers steam | Business| Economy and finance news from a German perspective | DW | 17.05.2016
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US economy gathers steam

Last month, US consumer prices recorded their biggest increase in more than three years, supported by higher fuel prices and rising construction activity, pointing to a steady recovery in the world's biggest economy.

Fresh data released by the US Labor Department on Friday showed consumer prices rose 0.4 percent in April, the largest one-month increase since February 2013, after rising only 0.1 percent in March. The index was up 1.1 percent compared with the same month a year ago.

The gains in prices were broad-based last month, including rises in medical care, shelter and transportation services. However, prices for new vehicles and apparel fell.

While food prices rose 0.2 percent after a drop in March, the most significant boost to US inflation came from energy, which jumped 3.4 percent - their biggest one-month gain since early 2013. Gasoline prices at the pump even soared 8.1 percent.

The rise in prices in April is likely to be welcomed by the US central bank, the US Fed. Last month, Fed officials softened their language on inflation at the end of a regular meeting, noting that it continued to run below target because of "earlier declines in energy prices and falling prices of non-energy imports."

The Fed has a 2 percent inflation target and tracks an inflation measure which is currently at 1.6 percent.

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US economy strong in April

Home building and retail sales pick up

In a separate report, the US Commerce Department said housing starts increased 6.6 percent to a seasonally adjusted annual pace of 1.17 million units last month. Starts for single-family homes, the largest segment of the market, increased 3.3 percent, while housing starts for the volatile multi-family segment soared 13.9 percent.

Building permits also rose in April, increasing 3.6 percent to 1.12 million units.

April housing data followed strong US retail sales reported by the Commerce Department last Friday. A jump of 1.3 percent from March figures added to suggestions that economic growth regained steam early in the second quarter.

Industry output jumping

Similarly, US industrial production was gaining traction in April, posting its biggest rise since November 2014. Output, including factories, mines and utilities, rose 0.7 percent after dropping in the previous two months.

Driving the climb was utility production, which surged 5.8 percent - the biggest jump since February 2007. Demand for electricity and natural gas returned to more normal levels after unusually mild weather in March.

Factory output rebounded 0.3 percent, the most since January, helped by a solid increase in auto and machinery production.

However, mining production dropped 2.3 percent, marking the eighth straight decline as energy companies reduced oil and gas drilling. Especially coal producers were cutting back in the face of lower-price competition from natural gas.

uhe/cjc (Reuters, AFP, AP)

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