Morning Money Memo…
Harsh winter weather led to drop in home construction in January. The Commerce Department says builders started work at a seasonally adjusted annual rate of 880,000 units, down 16 percent from the month before.
In December, construction had fallen 4.8 percent. The declines in both months were blamed largely on the weather. Applications for building permits dropped more than 5 percent in January for a third month.
Most economists expect home building rates to improve this spring. For all of 2013, housing construction rose 17.7 percent to 976,000 units, the best showing since 2007.
Here’s a positive indicator for the housing market. Lumber Liquidators says its fourth-quarter net income rose nearly 51 percent. The hardwood flooring retailer’s sales rose 23 percent in the last quarter compared with the year before as more Americans spent money on home improvements. Lumber Liquidators announced a new $50 million share buyback and said it expects full-year 2014 earnings to grow.
The latest merger announcement has some sparkle to it. Signet Jewelers says it’s buying smaller competitor Zale in a deal worth about $690 million. The announcement sparked a 40 percent jump in Zale Corp. shares. Signet Jewelers rose 12 percent.
Gas prices continue to rise. West Texas crude hit $103 a barrel this morning on global futures markets. The US Energy Department says the average price of unleaded gas rose 7 cents a gallon in the past week. Why? Patrick DeHaan, senior petroleum analyst at Gas Buddy, says it’s refinery maintenance and increasing demand for crude oil: “The cold weather here in the US boosting consumption of heating oil and other petroleum products as well.” Analysts expect prices to hit their peak in March or April and decline later in the spring. “By and large, 2014 will not feature the same pain at the pump that we saw last year,” says DeHaan.
The Federal Reserve will require the largest foreign banks operating in the US to hold higher capital reserves to protect against potential loan losses. The stricter regulations are aimed at preventing the threats that contributed to the 2008 financial crisis. The requirements are similar to those already adopted for big American banks. Fed Chair Janet Yellen, presiding at her first public meeting of the central bank’s board, says the changes will “help address the sources of vulnerability” exposed by the crisis. The rules were adopted by a 5-0 vote. Foreign banks had objected to the changes.
North Carolina officials say wastewater containing unsafe levels of arsenic from a Duke Energy coal ash dump is flowing into the Dan River, which is already contaminated from a massive Feb. 2 spill. The state Department of Environment and Natural Resources ordered Duke to stop the wastewater coming from a pipe running under a coal ash dump at its Eden power plant. State regulators are concerned the second pipe could fail, triggering another spill. Water coming from the pipe contains arsenic at levels 14 times what’s considered safe for human contact.
Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesnow