Reports Give Mixed View of U.S. Economy

U.S. consumer confidence fell this month and industrial production dipped in March, but the bad news was countered by a third report Friday that housing starts increased the most in almost a year.

The reports show the economy still has pockets of weakness that may keep the Federal Reserve from being quick to raise its benchmark interest rate, economists said. Policymakers should wait for “at least a little more confirmation of the apparent strength in the economy,” said J. Alfred Broaddus Jr., president of the Federal Reserve Bank of Richmond.

The University of Michigan’s preliminary index of consumer sentiment for April fell to 93.2 from 95.8.

The university’s expectations index, which measures optimism about the next one to five years, fell to 86.2 from 88.8 a month earlier. The current conditions index, based on consumers’ perceptions of their financial situation and whether it is a good time to make big purchases, fell to 104.1 from 106.8.

Consumers’ concerns about rising gasoline prices, declining stock prices and Middle East tensions may have outweighed the effect of an improving economy and jobs outlook, economists said. In addition, they noted that April had become the deadliest month for the U.S. military since the invasion of Iraq in March 2003, with the death of at least 87 U.S. troops this month.

Industrial production unexpectedly dropped 0.2% in March, the first decrease in 10 months, as utilities cut production in unseasonably warm weather and factories made fewer cars, the Fed said. The proportion of industrial capacity in use fell to 76.5% from 76.7%.

The drop in production at the nation’s factories, mines and utilities was the first since May and followed a revised 0.8% increase in February, the Fed said. Electric and gas utility production declined 2.3% last month, the biggest decrease since 4.8% in March 2003.

A report by the Commerce Department showed builders broke ground at an annual rate of 2 million houses in March, up 6.4% from February, as a drop in mortgage rates attracted buyers and weather-delayed projects got underway.