A good surprise drives a rise

Housing starts rose 22.2 percent in February to a seasonally adjusted annual rate of 583,000. Permits edged up 3 percent. The increase in starts was entirely in multi-family units; permits went up among single-family dwellings but down for multi-unit projects. This was very surprising good news that we will take in both hands. It will be interesting to see how the divergences between single and multi-unit construction play out over the next few months.

CPI-U increased 0.4 percent in February after rising 0.3 percent in January. As has been the case recently, the movement was dominated by swings in energy prices. The core CPI (exclude food and energy) has been pretty well behaved, with recent moves on the order of 0 to 0.2 percent per month and a total increase of 1.8 percent over the past year. This report had more good news than anything else in it.

Real average weekly earnings fell by 0.3 percent from January to February. A 0.2 percent increase in average hourly earnings was offset by a 0.4 percent increase in CPI-W. Average weekly hours were unchanged. Any decline in real earnings is bad news.

Thus far in March, there has been less bad news than there was in February. The good news index stands at 37.5 so far this month, compared with 26.7 at the same point last month (and 21.1 for all of February).