U.S. consumer sentiment unexpectedly dropped in a mid-April reading, suggesting that concerns about the war in Iraq have been outweighing upbeat reports on the economy.
The University of Michigan reported Friday that its consumer-sentiment index fell to 93.2 from 95.8 at the end of March. Measures of consumers’ assessment of current conditions as well as expectations for the future both declined.
Earlier reports showed industrial production declined in March, led by a sharp slowdown in utilities output, while new housing construction rebounded last month, helped by better weather.
“The entire drop in output was due to a 2.3% decline in utility output, reflecting less severe winter weather than in January and February,” wrote Ian Shepherdson, chief U.S. economist at High Frequency economics, in a note to clients. The 2.3% drop in utilities output was the biggest drop for the sector in a year; capacity use in the sector eased more than two percentage points to 84%.
Meanwhile, housing starts jumped 6.4% last month to a seasonally adjusted 2.007 million annual rate last month, the Commerce Department reported Friday. The increase was the largest since last May, and followed two straight months in which bad weather in some parts of the country put a damper on housing construction. In February, starts dropped a revised 2.6% to an annual rate of 1.887 million. Building permits, an indicator of future building activity, rose 1.9% last month to a 1.946 million annual rate.
But housing starts “cannot be sustained at this level,” Mr. Shepherdson wrote in an earlier note. And, “with a serious rise in interest rates now finally under way, [starts] will likely decline markedly by the end of the summer.”
WSJ Consumer Sentiment Slides; Industrial Production Slows
WALL STREET JOURNAL ONLINE NEWS ROUNDUP
WSJ, April 16, 2004 1:04 p.m.