U.S. consumer prices rose in line with analyst expectations in November while a measure of inflation that strips away volatile energy and food costs remained unchanged.
Separately, home construction rebounded in November from a big drop, rising more than expected as builders cautiously respond to recovering demand for new houses.
Driven by increasing energy costs, the seasonally-adjusted consumer price index rose 0.4% in November, the Labor Department said Wednesday. That compares with an increase of 0.3% in October.
The core CPI, which strips out volatile food and energy prices, was unchanged after rising 0.2% in October. November marked the first steady reading for that number following 10 months of increases.
Economists surveyed by Dow Jones Newswires had expected November CPI would climb by 0.4% and projected the core figure would rise by 0.1%.
The data comes as the U.S. Federal Reserve is meeting on interest rates and just after a separate Labor Department report a day earlier showed a surprising spike in producer prices.
Analysts, however, see that increase as a seasonal fluctuation driven largely by surging energy prices. Spare capacity in the economy is expected to keep a lid on core price pressures.
Still, the unadjusted CPI index in November posted its first increase in more than a year, rising by 1.8%.
The Labor department's report showed that food prices rose 0.1% last month, mirroring their October increase. Energy prices rose by 4.1% in November, nearly triple the 1.5% increase in the previous month.
November's increase in the energy index -- driven by gasoline, electricity, fuel oil and natural gas prices -- is the fourth in as many months and largest since August.
Without rounding, the Labor Department said that consumer prices rose 0.400% last month. The unrounded core CPI was up 0.034%.
In a separate report Wednesday, the Labor Department said real average weekly earnings advanced by 0.1% in November. Since peaking in December of last year, real average earnings have fallen 1.7%.
Housing Starts Rebound
Housing starts rose by 8.9% to a seasonally adjusted 574,000 annual rate compared to the prior month, the Commerce Department said Wednesday.
The report also said building permits, single-family groundbreakings and apartment construction increased.
Economists surveyed by Dow Jones Newswires forecast a 7.7% increase in November housing starts, to an annual rate of 573,000.
The better-than-expected jump follows a surprising plunge in October. That drop was revised slightly; Wednesday's data said October construction fell by 10.1% instead of by 10.6% as originally reported.
The scary decline in October had raised concerns about the housing and economic recovery. Analysts blamed wet weather and the looming expiration of a fat tax credit for buyers for such a sharp reduction in groundbreakings.
The tax credit has since been extended, through April, and the weather was better. But worries about the economy persist, with the U.S. unemployment rate at 10%. A report this week showed the confidence of home builders dipped in December. The National Association of Home Builders on Tuesday said its housing market index slid one point, to 16. Builders lost confidence in current sales conditions and expectations for the next six months, the report said.
Aside from joblessness restraining home buying, builders are also worried about the potential for more foreclosures. An increase in distressed property would add to supply in the existing-home market; the discounted price tags would likely lure buyers away from the new-home market.
The housing crisis and recession sent new-home sales crashing, but demand hit bottom in January and, since then, has climbed 31%, the latest government data show. Affordability, the economic recovery, and tax relief has drawn buyers. With the sales increase, inventories of unsold homes have shrank, leading some builders to resume construction. Starts last month have gone up 20% from an April low of 479,000.
Wednesday's data showed building permits in November rose 6.0% to a 584,000 annual rate. Economists had expected permits to rise by 3.3% to a rate of 570,000. October permits decreased 4.2% to 551,000. Building permits are a sign of future construction.
Single-family housing starts in November compared to the prior month rose 2.1% to 482,000.
Apartment construction -- housing with two or more units -- surged 67.3% to 92,000. Within that multi-family category, groundbreakings of homes with five or more units were 62.7% higher.
Regionally in November, housing starts rose 12.3% in the South, 16.4% in the Northeast, 3.0% in the Midwest, and 1.9% in the West.
Year over year, housing starts in the U.S. last month were 12.4% lower than the pace of construction in November 2008.
Current Account Deficit Expands
A new U.S. government report provided more evidence of a rebounding economy, with a rising current account deficit as Americans imported more oil and other consumer and industrial goods in the third quarter.
The U.S. current account deficit, a broad measure of U.S. international trade and investment activity, increased to $108.0 billion in the third quarter, the Commerce Department announced Wednesday. The second quarter deficit was revised down to $98.0 billion from an originally reported $98.8 billion.
The latest quarterly deficit was higher than expected, as economists surveyed by Dow Jones Newswires had forecast a $107.0 billion current account deficit in the quarter ending Sept. 30.
The current account measures trade in goods and services, transfer payments, and investment income. A deficit signals a nation is sending more money abroad more than it is saving at home. Although the gap had narrowed during the past year as the economic recession lowered U.S. purchases of foreign goods, the latest report suggests that trend may be coming to an end.
The third-quarter deficit amounted to 3.0% of gross domestic product, up from 2.8% in the second quarter. The current account deficit as a percentage of GDP, a broad measure of economic activity, hasn't been this high since the fourth quarter of 2008, the Commerce Department said.
Most of the current account balance is made up of trade in goods and services. The third-quarter shortfall in goods and services rose to $97.4 billion from $81.2 billion in the second quarter. The deficit in goods increased to $132.1 billion int he third quarrer from $115.5 billion in the second.
U.S. third-quarter imports rose to $396.1 billion from $361.6 billion, an increase the Commerce Department said was largely due to imports of oil and oil products, and industrial and consumer goods.
Exports also increased, rising to $263.9 billion from $246.1 billion, chiefly on the strength of industrial supplies and materials.
In contrast, the U.S. posted a surplus in trade in services, with service exports rising to $93.9 billion from $91.0 billion. Travel and other transportation services and direct defense spending accounted for much of the surplus, according to the Commerce Department.
Unilateral current transfers, which includes foreign aid from the U.S. to other countries and money from foreign workers to families living abroad also rose, with third quarter transfers of $34.4 billion, up from $33.4 billion in the second quarter.
Income on U.S.-owned assets abroad posted a rising surplus in the third quarter, jumping to $23.7 billion from $16.7 billion in the second quarter.
Net financial inflows to the U.S. were down sharply, falling to $38.3 billion in the third quarter from $63.3 billion in the second. The Commerce Department attributed the decline to a drop in U.S.-owned assets abroad that was mostly offset by an increase in foreign-owned assets in the U.S.
Foreigners showed growing appetite for riskier U.S. assets in the quarter ending Sept. 30. U.S. stock purchases by foreigners rose, with net third-quarter purchases of $48.6 billion, up from $35.6 billion in the second quarter, the Commerce Department said.
The trade report showed that foreigners bought a net $9.2 billion of U.S. Treasury securities in the third quarter, down from $22.8 billion in the second quarter.
Foreigners bought a net $30.4 billion of U.S. corporate bonds in the third quarter, up from $22 billion in the second quarter, and bought a net $6.6 billion of federal agency bonds, up from net purchases of $0.3 billion in the second quarter.
Foreign direct investment in the U.S. increased $40 billion in the third quarter, following a $37 billion increase in the second.
