US housing continues to drag national economy

14 May 2007 23:15  [Source: ICIS news]

WASHINGTON (ICIS news)--The continuing downturn in the US housing sector will offset gains in exports and positive consumer spending with a significant impact on manufacturing, the leading manufacturing trade group said on Monday.

 

The National Association of Manufacturers said in an update of its January 2007 economic report that the housing downturn will keep the US economy stuck in low gear, although some acceleration is likely in the second half.

 

“An improved trade picture and positive consumer spending will continue to be offset by a downturn in housing, pullbacks in inventories and sluggish business investment, notably in industrial equipment,” said the association’s chief economist, David Huether.

 

Huether said he expects the US economy to see tepid 2.3% growth in the second quarter before picking up to 2.7% and 3.2% growth in the third and fourth quarters respectively.

 

“With the dollar at its lowest level since mid-1997 and solid economic growth taking place abroad, exports should continue to rise,” Huether said, adding that exports this year are expected to grow by 5.4% while imports will increase by only 3.3%.  That will decrease the US trade deficit by $61bn (€45bn) this year, he said.

 

“However, when new houses aren’t going up very quickly, neither is the economy,” Huether said. “The ongoing downturn in housing will significantly impact some manufacturing sectors,” he said, including wood products, some minerals, furnishings and textiles. 

 

The new home construction market is a key downstream consuming sector for a wide variety of chemicals and plastics.

By: Joe Kamalick
+1 713 525 2653

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