Factory production grows, but housing falls in newest economic reports

Production at U.S. factories climbed in January for the fifth straight month, but reports showed builders started work on fewer single-family homes, illustrating the economic expansion continues to be fueled by manufacturing.

Manufacturing output rose 0.3 percent in January, according to data released by the U.S. Federal Reserve. However, total production, which includes mining and utilities, fell unexpectedly. Single-family housing starts fell by 1 percent to an annualized pace of 413,000 - the lowest total since May 2009, the U.S. Commerce Department said.

Businesses are investing in new equipment, helping global manufacturing sales to remain robust. On the other hand, home builders are struggling to grow as the battered housing market shows no signs of improving.

Jim O'Sullivan, the global chief economist at MF Global, told Bloomberg the newest economic reports showed the growing dichotomy between the housing and manufacturing sectors. "Manufacturing has been an important contributor to growth and it’ll get stronger," he asserted. "Given the still-huge glut of housing inventories, new-home building is unlikely to contribute to the economy in any meaningful way this year."

Building permits, which serve as an indicator of future construction growth, declined by 10 percent to a 562,000 annual pace in January.