Washington, Dec. 17 (Bloomberg) -- Housing construction and industrial production rebounded in November as the U.S. economy builds strength heading into 2003, economists said reports today probably will show. Construction starts of new homes probably rose 4.8 percent to a 1.68 million annual rate last month, based on the median forecast of 52 economists surveyed by Bloomberg News. November industrial production probably advanced 0.2 percent, the first rise since July, based on the median forecast of 56 economists in a Bloomberg survey. A separate report today on consumer prices will probably show a 0.2 percent increase in November, slower than the 0.3 percent increase a month earlier, economists said. The core rate of the consumer price index, excluding food and energy, probably rose 0.2 percent, the same as the previous month. Federal Reserve Governor Mark Olson, in an interview last week, said economic growth next year of ``3.5 percent is not unrealistic.'' This year, the economy will probably expand 2.4 percent, according to the latest Blue Chip Economic Indicators forecast, released Dec. 10. The Commerce Department is to issue the housing starts statistics at 8:30 a.m. Washington time. The Federal Reserve is to release the industrial production figures at 9:15 a.m. Washington time. The consumer price index, from the Labor Department, is set for 8:30 a.m. Washington time.
Construction Boom
So far this year, 1.444 million houses have been started, the strongest January-to-October period since 1986. Mortgage rates close to 30-year lows and record home sales have kept the pace of construction elevated, helping to underpin the economic recovery. Housing makes up more than half of all construction. Housing ``makes us more optimistic that the economy is going to pull through,'' said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi Ltd. in New York. KB Home, the sixth- largest homebuilder by stock market value, this month reported a 14.2 percent jump in November orders. Industrial production, meantime, probably rose an average 0.4 percent a month from January through July as the recovery from last year's recession prompted factories to replenish depleted inventories. In October, industrial production dropped 0.8 percent, Fed statistics showed. Companies are controlling costs and keeping just enough inventory on hand to meet demand. Production is mirroring the uneven economic recovery. General Motors Corp. is ramping up production in the first quarter of 2003 at the same time Ford Motor. Co. is cutting back.
Waiting for Higher Demand
``Lean inventories provide support, but new business orders remain weak,'' said Tim Rogers, chief economist at Briefing.com in Boston. ``A sustained upturn in production waits for stronger demand for manufactured goods.'' The small increase in industrial production probably means capacity use stabilized after falling in two of the last three months. Industry is projected to have used 75.4 percent of capacity in November, the same as the previous month, according to the median forecast. The October rate was the lowest since March. Capacity utilization reached an 18-year low of 74.6 percent in December 2001. //www.quote.bloomberg.com