n">(Reuters) - Johnson Controls Inc (JCI.N) forecast a smaller-than-expected profit for the current quarter due to lower auto production in Europe, sending the company's shares down more than 3 percent.

The company, the largest U.S. auto parts supplier, forecast a fiscal second-quarter profit of 40 cents to 42 cents per share, short of analysts' expectations of 51 cents, according to Thomson Reuters I/B/E/S.

"The forecast reflects the current European automotive production environment and short-term delays in flexing labor in the region," the company said on Friday.

Johnson Controls' stock was down 3.3 percent to $30.91 on the New York Stock Exchange. Shares fell even as the company posted a slightly better-than-expected profit in its fiscal first quarter.

The company in October said weaker business in Europe would reduce its first-half profit significantly. Restructuring actions initiated in the latter part of 2012 are expected to boost profit in the second half.

Johnson Controls, which makes car interiors and batteries, maintained its fiscal 2013 outlook of higher profit and sales.

Citi analyst Itay Michaeli said the second-quarter forecast suggested Johnson Control would earn 65 percent of its annual profit in the second half of the year, about 10 percentage points higher than in the last two years.

"Given the current demand environment and the operational pressures the company is facing in Europe, we believe the risks around this outlook are elevated and investors could avoid shares in the near term as this is discounted," Baird analyst David Leiker said in a research note.

In its fiscal first quarter, ended December 31, Johnson Controls earned $354 million, or 52 cents per share, compared with $424 million, or 62 cents per share, a year earlier. Analysts expected 51 cents.

Revenue rose marginally to $10.42 billion. Analysts on average had estimated revenue of $10.26 billion.

(Reporting by A. Ananthalakshmi in Bangalore and Deepa Seetharaman in Detroit; Editing by Maju Samuel)

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Fri Jan 18, 2013 4:25pm EST

n">(Reuters) - Shares of CyrusOne Inc (CONE.O) rose as much as 15 percent on their market debut after the data center operator priced its offering at the high end of its expected price range.

CyrusOne shares closed up nearly 12 percent at $21.20 on the Nasdaq on Friday while majority owner Cincinnati Bell's (CBB.N) stock closed down 6 percent at $5.00 on the New York Stock Exchange.

"What happened with CyrusOne is that people looked at the parent and found that the parent was very weak. They've basically spun off a division that's worth more than the parent," said Francis Gaskins, a partner at IPODesktop.com.

Texas-based CyrusOne priced its offering of 16.5 million shares at $19 each, raising $313.5 million. At the offer price, CyrusOne has a market value of about $1.18 billion.

Cincinnati Bell, valued at about $1 billion, will own about 71.6 percent of CyrusOne, which rents equipment, space and bandwidth to store and transfer data.

CyrusOne had 24 data centers in Austin, Chicago, Cincinnati, Dallas, Houston, London, South Bend and Singapore as of March 2012, according to its website.

CyrusOne has structured itself as a REIT, joining a string of technology companies looking to save on tax through the structure.

Companies with large real estate assets eye a REIT structure as it helps reduce the tax burden on their rental income. Shareholders also stand to gain as REITs are required to distribute at least 90 percent of their profits as dividends.

Shares of another REIT and data center company, Digital Realty Trust Inc (DLR.N), have risen about 8 percent in the last month, while those of data center operator Equinix Inc (EQIX.O), which is planning a REIT conversion, have risen about 9 percent.

Industry research firm Gartner estimates that the global market for data center services was about $150 billion in 2011 and will rise to about $200 billion in 2012, the company said in a regulatory filing.

Morgan Stanley and BofA Merrill Lynch were joint-bookrunners to the offering.

SUNCOKE ENERGY DEBUT

Shares of Illinois-based SunCoke Energy Partners LP (SXCP.N) opened flat on debut after the metallurgical coal producer priced its offering at the low end of its expected price range.

The company priced its offering of 13.5 million shares at $19 each, raising $256.5 million.

The downstream energy limited partnership listed Credit Suisse and Citigroup as lead underwriters to the offering.

SunCoke Energy Partners' share closed down 4 percent at $18.25 on the New York Stock Exchange.

(Reporting By Neha Dimri in Bangalore; Editing by Supriya Kurane and Don Sebastian)

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1 of 2. New housing construction is seen in Darnestown, Maryland, October 23, 2012.

WASHINGTON | Fri Jan 18, 2013 1:07am EST

WASHINGTON (Reuters) - Americans are feeling increasingly confident in the future and more and more are striking out to set up their own homes, a move that is helping propel the housing recovery.

The deep financial crisis and recession of 2007-2009 kept many Americans from leaving their parents' nests and drove others back into them, putting a sharp brake on the pace at which new households formed.

Household growth averaged about 500,000 per year from 2008 through 2010 - less than half the rate seen at the height of the housing boom in the years just before that. The pace in 2010 was the weakest since 1947.

But the rate at which individuals or families are getting their own homes picked up over the past two years, underpinned by a steady if tepid economic recovery and gradual labor market gains. In 2011, households increased 1.1 million and they grew closer to 1.2 million last year.

"The rise in household formation bodes well for the housing recovery. Instead of having too many houses, we are turning to a situation where there aren't enough," said Guy Berger a U.S. economist at RBS in Stamford, Connecticut.

Indeed, housing has turned from the economy's sorest spot to its brightest, with new building activity at 4-1/2-year highs. Housing activity in turn spurs related areas like furniture.

That is because of people like Linna Chhean. After graduating from college in May 2007, she moved back in with her parents, helping out in a family-run business.

The 27-year-old finally moved into her own one-bedroom apartment four weeks ago after she was hired as a designer in the Dallas offices of a global public relations firm.

"I wanted to get a job in my field, which is art. I was working for them in a convenience store, which is not what I wanted to do at all," said Chhean.

BRIGHTENING PROSPECTS

The worst recession since the Great Depression of the 1930s cost the economy 8.8 million jobs and drove the unemployment rate up to 10 percent.

Dim job prospects and growing financial stress undercut the pace of household formation - a central force behind housing demand - even though the population kept growing at a rate of about 2.7 million per year.

Republican vice presidential candidate Paul Ryan seized on the dashed hopes of young Americans in bashing President Barack Obama's policies at the Republican national convention in August.

"College graduates should not have to live out their 20s in their childhood bedrooms, staring up at fading Obama posters and wondering when they can move out and get going with life," he said.

An analysis by economist Timothy Dunne at the Cleveland Federal Reserve Bank found there was a shortfall of 2.6 million households from 2008 through 2011 compared to what pre-recession trends would have suggested.

Younger adults between the ages of 18 and 34 accounted for almost three quarters of this gap; the number of people in this age cohort living with their parents increased by 2 million between 2007 and 2011.

But the tide appears to be turning.

Last August, Edward Kennedy, 22, moved into his own apartment in Bridgeport, Connecticut, after landing a job at Sacred Heart University's undergraduate admissions office.

"I moved home after graduating in May 2012. It seemed like the best idea to save some money," said Kennedy. "I plan on getting my MBA over the next year and a half, while working at the university."

He said more and more of his peers were likewise setting out on their own.

HOUSEHOLD GROWTH BOOSTS RENTAL MARKET

The gains are being felt primarily in the rental market, where rising demand has spurred a sharp pick up in construction of apartment buildings. In contrast, the U.S. homeownership rate hasn't risen much from a 15-year low reached in early 2012.

"We are going to see more recovery in the rental market, in the very short run. As the market improves, people will start to face higher rents and over time, that will spill over into the owner-occupied market," said Gary Painter, a public policy professor at the University of Southern California.

New home completions have lagged the increase in household formation, leading to a tightening supply.

According to RBS' Berger, more than 1.3 million new residential structures should have been completed last year to keep pace with household growth. But only 651,400 homes were finished, the second lowest on record.

"Given that the stock of homes available for sale is already very low, inventories alone are unlikely to meet the demand presented by these new households," said Berger.

A monthly survey conducted by the National Association of Home Builders shows that growing demand and tightening supply have pushed homebuilder sentiment up to a near seven-year high.

NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Florida, said builders were now gearing up, unperturbed by the possibility that banks could dump an increasing number of foreclosed homes onto the market as conditions improve.

"Even if we have a wall of supply coming in, we will have a wall of demand to balance it," he said.

Rutenberg estimated 916,000 new residential projects would be started this year, compared to 780,000 in 2012. And Rutenberg expects rising demand to keep builders busy for years to come.

He said new construction would satisfy about 46 percent of the demand for single-family homes this year, and 83 percent of the demand for apartment buildings over the next 10 years.

Although home building accounts for only about 2.5 percent of U.S. gross domestic product, economists believe the turnaround in the housing market has just enough momentum to take over the baton from manufacturing as a driver of growth.

Economists estimate that for every new single family home constructed, at least three permanent jobs are created. There is also a boost through demand for items ranging from furniture to paints.

"Housing will take a leading role. We anticipate that (inflation-adjusted) residential investment will grow 22 percent this year, the fastest since the early 1980s," economists at JPMorgan wrote in a research note.

They estimate homebuilding could add around 0.5 of a percentage point to economic growth this year.

(Reporting by Lucia Mutikani; Editing by Tim Ahmann and Tim Dobbyn)

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Job seekers stand in line to meet with prospective employers at a career fair in New York City, October 24, 2012.

WASHINGTON | Thu Jan 17, 2013 4:58pm EST

WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment aid hit a five-year low last week and residential construction surged in December, the latest signs that the U.S. economic recovery remains on track.

The reports on Thursday showed the economy was weathering an uncertain fiscal environment surprisingly well. Still, growth in the fourth quarter was likely subdued with only a modest pick-up expected in the first three months of this year.

"While growth has been slow, the damage done from the uncertainty surrounding the fiscal cliff was not sufficient to topple the recovery," said Millan Mulraine, a senior economist at TD Securities in New York.

The fiscal cliff refers to a wave of deep government spending cuts and tax increases, part of which was avoided after a last-minute agreement by U.S. lawmakers. A fight over raising the government's borrowing limit looms.

Initial claims for state unemployment benefits fell 37,000 to a seasonally adjusted 335,000, the lowest level since January 2008, the Labor Department said. It was the largest weekly drop since February 2010 and ended four straight weeks of increases.

While problems adjusting the data for seasonal fluctuations might have exaggerated the decline, economists said the report still suggested an improvement in sluggish labor market conditions and the economy as a whole.

"Having taken a pinch of salt, however, we would suggest that the trend in claims generally show no pickup in layoff activity around the turn of the year," said John Ryding, chief economist at RDQ Economics in New York.

A separate report from the Commerce Department showed housing starts jumped 12.1 percent last month to their highest level since June 2008. Permits for future home construction were also the highest in about 4-1/2 years.

Stocks on Wall Street ended higher on the fairly upbeat jobs and housing data, with the broad Standard & Poor's 500 index hitting a five-year high. Commodity prices also firmed, but U.S. government bond prices slumped.

The dollar rallied to a 2-1/2-year high against the yen.

HOUSING GAINING TRACTION

Though warm weather likely helped, the data was confirmation of the improving housing market tone, and home building made gains across all four regions. Groundbreaking also increased for both single-family homes and multi-family units.

Builders started 780,000 houses in 2012. While still low by historical standards, it was the third straight year of gains in home construction. Housing is no longer a drag on the economy and residential construction is expected to have contributed to growth last year for the first time since 2005.

"The housing recovery has steam. Interest rates are rock-bottom low, inventories of new and existing homes are lean, and the economy is creating jobs," said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts.

Newport said they expected starts to rise to 970,000 this year. The reports came on the heels of data this week showing solid retail sales and manufacturing growth in December.

But weak exports, a slow pace of inventory accumulation and the reversal of a surge in defense spending probably slowed growth to below a 2 percent annual pace in the fourth quarter.

In a reminder that the outlook for the economy remained shaky, a third report showed factory activity in the U.S. mid-Atlantic region contracted this month as new orders tumbled.

The Philadelphia Federal Reserve Bank said its business activity index fell to -5.8 from 4.6 in December. A reading below zero indicates contraction in manufacturing in eastern Pennsylvania, southern New Jersey and Delaware.

"Manufacturing has slowed but it's still growing. I'm not going to read too much into this until I see other regional surveys," said Gus Faucher, a senior economist at PNC Financial Services in Pittsburgh.

The claims data covered the survey week for the January data for the closely watched nonfarm payrolls report. The four-week moving average of new jobless claims, a better measure of labor market trends, fell 6,750 to 359,250, suggesting some improvement in labor market conditions.

Job growth has been gradual, with employers adding 155,000 new positions in December. The unemployment rate held steady at 7.8 percent last month. High jobless is likely to keep the Federal Reserve on an expansionary monetary policy path.

Atlanta Fed President Dennis Lockhart said on Thursday the Federal Reserve will very likely need to continue its large-scale asset purchases into the second half of this year.

(Additional reporting by Jason Lange in Washington and Richard Leong in New York, editing by Chizu Nomiyama)

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U.S. House Speaker John Boehner (R-OH) (R) and House Majority Leader Eric Cantor (R-VA) speak to the media on the ''fiscal cliff'' on Capitol Hill in Washington, December 21, 2012.

WASHINGTON | Fri Jan 18, 2013 6:37pm EST

WASHINGTON (Reuters) - Republicans in the House of Representatives backed away on Friday from a fiscal clash with President Barack Obama next month that could have risked a government default and chaos in financial markets, shifting to a new, less aggressive stance.

Top Republican leaders, meeting in Williamsburg, Virginia, said they were prepared to allow the U.S. government to borrow enough money to keep it fully operating for the next three months without demanding immediate spending cuts from Obama.

Instead, the Republicans, who control the House, will require as part of the legislation raising the debt ceiling that the Democratic-led Senate pass a budget plan by April 15.

If the Senate fails to act, they said, members of Congress would not get paid. How that might work in practice, in light of existing budget law and constitutional restrictions on changing congressional salaries in the middle of a term, was unclear. House Republicans hope to pass the legislation next week.

Republican leaders, including House Speaker John Boehner and Majority Leader Eric Cantor, made the announcement after an annual retreat at a resort in Williamsburg, where members listened to pollsters describe the party's decline in standing among American voters.

It followed a humiliating defeat in the "fiscal cliff" battle that ended on New Year's Day with Obama getting tax increases he sought on the wealthy without committing to significant budget cuts Republicans were seeking in return.

World equity and oil prices rebounded after the statement by the Republican leaders.

STRATEGIC SHIFT

The announcement marked a major climbdown for Republicans, who have seen the debt ceiling as their strongest point of leverage in Washington's partisan spending wars, despite the consternation it caused the White House, global financial markets and public opinion.

The White House on Friday welcomed the three-month extension plan as long as it was not conditioned on spending cuts. Obama has argued that negotiations on spending cuts should be part of larger deficit reduction talks, and not be tied to the debt ceiling.

"We are encouraged that there are signs that Congressional Republicans may back off their insistence on holding our economy hostage to extract drastic cuts in Medicare, education and programs middle class families depend on," White House spokesman Jay Carney said in a statement.

Adam Jentleson, a spokesman for Senate Majority Leader Harry Reid, also said the Republican approach was reassuring.

"If the House can pass a clean debt ceiling increase to avoid default and allow the United States to meet its existing obligations, we will be happy to consider it," he said in a statement.

A spokesman for House Democratic leader Nancy Pelosi was less receptive. "This proposal does not relieve the uncertainty faced by small businesses, the markets and the middle class. This is a gimmick unworthy of the challenges we face and the national debate," Drew Hammill said.

The details on the new Republican approach appeared less pressing to party leaders than defusing the politically and economically explosive debt ceiling battle that was expected in late February and early March.

The Treasury needs congressional authorization to raise the current $16.4 trillion U.S. debt limit sometime between mid-February and early March. How long a debt ceiling lasts - a few months or a few years - depends on the amount of borrowing authorized.

Republicans had promised to use the occasion to demand deep spending cuts from Obama and his Democrats, and some had said they were willing to push the government to the brink of default if their demands were not met.

That sort of rhetoric all but vanished on Friday.

"Next week, we will authorize a three month temporary debt limit increase to give the Senate and House time to pass a budget," Cantor said in a statement.

"Furthermore, if the Senate or House fails to pass a budget in that time, Members of Congress will not be paid by the American people for failing to do their job. No budget, no pay."

The statement made no mention of the 27th Amendment to the U.S. Constitution, which says that no law "varying the compensation" of members of Congress shall take effect until after an intervening congressional election.

The plan aims to draw the Senate into action to shrink deficits. The Senate has failed to pass a formal budget resolution in nearly four years, and it has taken no action on House-passed Republican budgets.

Mitch McConnell of Kentucky, the Senate's Republican minority leader, said in a statement he welcomed the pressure on his Democratic counterparts who had "prevented this body from performing its most basic of duties: passing a federal budget."

RETREAT REFLECTION

A key theme to emerge at the Williamsburg conference was a willingness to pursue more incremental steps on deficit reduction. Rather than one massive deal, each fiscal deadline would represent an opportunity to find savings.

After the deadline for a debt ceiling increase, Congress faces a March 1 deadline to avert automatic spending cuts, and the March 27 expiration of funding for government agencies and programs. A three-month debt limit extension would add a further deadline in April or May.

Representative Mick Mulvaney of South Carolina, one of the House's most conservative budget hawks, said he had concluded that smaller steps were the best path forward in dealing with the immediate fiscal crisis.

Instead of passing regular budgets to try to reduce spending, Congress has relied largely on stop-gap spending measures, known as continuing resolutions, to keep the government running.

Senate leaders have said there was no need to pass a budget for the past two fiscal years because the last major budget deal in 2011 set spending levels that were more legally enforceable.

A House Republican leadership aide said it was not anticipated the three-month debt limit legislation would include spending cuts.

Although Boehner previously sought at least $1 in long-term spending cuts for every dollar of debt limit increase, the aide said the reforms associated with requiring budgets from both chambers would meet the speaker's requirements.

(Editing by Fred Barbash and Peter Cooney)

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NEW YORK | Fri Jan 18, 2013 4:11pm EST

NEW YORK (Reuters) - Mint has suspended sales of its 2013 American Eagle silver bullion coins after running out of stock due to soaring investor demand for the newly minted coins in the first two weeks of the year.

Sales to authorized dealers will resume on or about the week of January 28 after the U.S. Mint has replenished its inventory, it said in an email to authorized dealers on Thursday. The coins are produced at the Mint's West Point, New York, facility.

While it is typical for collectors to snap up newly stamped coins, interest this year has ballooned due to investors seeking refuge from U.S. economic uncertainty.

Silver Eagle sales to January 15 exceeded 5 million ounces and were on track to surpass the all-time monthly high of 6.1 million ounces, set in January 2012.

Physical coin sales had risen in the final months of 2012 as investors protected their nest eggs from a feared U.S. recession. Many economists predicted a U.S. economic downturn would occur if Congress and the White House did not act to stop pending huge tax hikes and automatic spending cuts known as the "fiscal cliff."

It is not the first time the Mint has faced a run on its stock. It started allocating sales to authorized dealers in recent years after its supplies were depleted by unprecedented demand.

The Mint on January 24 is due to start taking orders from the general public for silver proof coins, which fetch just under $63 each and are aimed at collectors.

(The story corrects last paragraph to make clear that silver proof coins, not silver bullion coins, fetch $63)

(Reporting By Josephine Mason; Editing by Gary Hill and Steve Orlofsky)

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U.S. House Speaker John Boehner (R-OH) arrives to speak to the media on the ''fiscal cliff'' on Capitol Hill in Washington, December 21, 2012.

WILLIAMSBURG, Virginia | Fri Jan 18, 2013 2:59pm EST

WILLIAMSBURG, Virginia (Reuters) - House Republican leaders on Friday said they would seek to pass a three-month extension of federal borrowing authority next week to buy time - on pain of losing their own paychecks - for the Democratic-controlled Senate to pass a budget plan that shrinks budget deficits.

The plan, hatched at a House Republican retreat, marks a new strategy from the party to break a budget deadlock by forcing the Senate to act first.

The Treasury needs congressional authorization to raise the current $16.4 trillion limit on U.S. debt sometime between mid-February and early March.

The Senate has not passed a formal budget resolution in nearly four years, while the House has passed budgets that have died in the Senate.

Under the planned legislation, House Majority Leader Eric Cantor said if the Senate or the House fail to pass a budget by April 15, lawmakers' pay would be withheld.

"Next week, we will authorize a three-month temporary debt limit increase to give the Senate and House time to pass a budget," Cantor said in an emailed statement.

"If the Senate or House fails to pass a budget in that time, members of Congress will not be paid by the American people for failing to do their job. No budget, no pay," he said on the last day of a House Republican retreat in Williamsburg.

U.S. House Speaker John Boehner said there should be no long-term increase in the federal debt limit until the Senate passes a budget, and House Republicans will try to force the Senate into action to cut spending.

"We are going to pursue strategies that will obligate the Senate to finally join the House in confronting the government's spending problem. The principle is simple: no budget, no pay," Boehner said in excerpts of his closing remarks to the retreat at a golf resort in Williamsburg.

Adam Jentleson, a spokesman for Senate Majority Leader Harry Reid, said the Senate would consider the increase if it was "clean."

"It is reassuring to see Republicans beginning to back off their threat to hold our economy hostage," Jentleson said in an emailed statement. "If the House can pass a clean debt ceiling increase to avoid default and allow the United States to meet its existing obligations, we will be happy to consider it."

Congress has relied largely on stop-gap funding measures to keep government agencies and programs running.

A House Republican leadership aide said it was not currently anticipated that the three-month debt limit increase legislation would include spending cuts. Although Boehner has previously sought at least $1 in long-term spending cuts for every dollar of debt limit increase, the aide said that the reforms associated with requiring budgets from both chambers would meet the speaker's requirements.

Spending cuts would be demanded of any longer term debt limit increase, the aide said, and Congress would still have to continue dealing with two other fiscal deadlines, the March 1 launch of automatic spending cuts, and government funding legislation that is needed by March 27.

(Reporting by David Lawder; Editing by Jackie Frank)

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A shopper walks down an aisle in a newly opened Walmart Neighborhood Market in Chicago in this September 21, 2011 file photo.

NEW YORK | Fri Jan 18, 2013 1:44pm EST

NEW YORK (Reuters) - Consumer sentiment unexpectedly deteriorated for a second straight month to its lowest in over a year in January, with many consumers citing fallout from the recent "fiscal cliff" debate in Washington, a survey released on Friday showed.

The sharp drop in sentiment over the last two months coincides with rancorous federal budget negotiations that have led to higher taxes for many Americans.

Just weeks after that deal, President Barack Obama and Republican lawmakers are expected to enter another tough round of negotiations over spending cuts, which could dent consumer confidence still further.

"The handling of the fiscal cliff talks and the realization that paychecks are going to be smaller due to the sunset of the payroll tax holiday are probably weighing on consumer attitudes at the moment," said Thomas Simons, a money market economist at Jefferies & Co. in New York.

While most of the scheduled tax hikes and spending cuts forming the fiscal cliff were avoided when Congress struck a deal on January 1, most U.S. workers saw their take-home salary diminished by the expiry of two percentage-point cut in payroll taxes.

"With the debt ceiling yet to be tackled and more political acrimony on the way, we suspect that confidence has room to deteriorate further," Simons said.

The Thomson Reuters/University of Michigan's preliminary reading on the overall index of consumer sentiment came in at 71.3, down from 72.9 the month before. The index was at its lowest since December 2011. It was also below the median forecast of 75 among economists polled by Reuters.

"The most unique aspect of the early January data was that an all-time record number of consumers - 35 percent - negatively referred to the fiscal cliff negotiations," survey director Richard Curtin said in a statement.

"Importantly, the debt ceiling debate is still upcoming and could further weaken confidence," he said.

House Republicans have signaled they might support a short-term extension of U.S. borrowing authority when the government exhausts that capacity sometime between mid-February and early March. A failure by Congress to raise this debt ceiling could result in a market-rattling government default.

On Friday, Republican House Majority Leader Eric Cantor said the House would consider a bill next week to extend the debt limit by three months in order to force the Senate to pass a budget.

U.S. stocks remained little changed after the data. The S&P 500 .SPX hit a five-year high in the last session. But on Friday, a weak outlook from Intel (INTC.O) offset encouraging data out of China and a fourth-quarter profit at Morgan Stanley (MS.N).

So far there has been a disconnect between what consumers say and do. U.S. retail sales increased a better-than-expected 0.5 percent in December. But given the recent weakening in sentiment investors will be watching for any signs that spending is starting to slip.

"The impact on consumers will be from the hike in the social security tax. That is undoubtedly going to hit discretionary spending. So this may be a signal of things to come," said Michael Woolfolk, a senior currency strategist at BNY Mellon in New York.

The consumer survey's barometer of current economic conditions fell to 84.8 from 87.0 and was below a forecast of 88.0. The gauge hit its lowest since July.

The survey's gauge of consumer expectations also slipped, hitting its lowest since November 2011 at 62.7 from 63.8, and was below an expected 65.2.

The survey's one-year inflation expectations rose to 3.4 percent from 3.2 percent, while the survey's five-to-10-year inflation outlook was unchanged at 2.9 percent.

(Additional reporting by Steven C. Johnson and Ellen Freilich; Editing by Andrea Ricci)

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WASHINGTON | Fri Jan 18, 2013 2:27pm EST

WASHINGTON (Reuters) - In almost all U.S. states, jobless rates ended 2012 lower than where they began, according to Labor Department data released on Friday that also showed unemployment rates fell from November in less than half the states.

From December 2011, 42 states and the District of Columbia registered unemployment rate decreases from a year earlier while six states recorded increases, and two states had no change, according to the report.

Since November, though, 22 states recorded unemployment rate decreases, while 16 states and the District of Columbia registered increases and 12 states had no change.

The monthly changes were less uniform across the country, suggesting the speed of economic recovery varied geographically.

The national unemployment rate was 7.8 percent in December, unchanged from November but down from 8.5 percent in December 2011.

North Dakota's rate ticked up from November to 3.2 percent, although the state continued to have the lowest unemployment rate in the nation due to the natural gas boom.

The rate was very close to that in December 2011, 3.3 percent, and, according to Michael Ziesch, co-manager of the state's Labor Market Information agency, "December rates have always posted an increase from (the) prior month as we see a normal increase in seasonal unemployment."

Nevada and Rhode Island held the highest unemployment rates in the country, 10.2 percent each in December, although both saw the rates drop from the month before. For Rhode Island, it was the lowest rate since March 2009.

Nevada had the biggest decline of all the states from November, when its rate was 10.8 percent, helped by growth in the state's large leisure and hospitality sector and by retail. Moreover, its rate in December was the lowest since February 2009.

"I'm pleased that we've ended the year on a positive note, with four straight months of decline in the unemployment rate and a gain of nearly 19,000 jobs in December compared to a year ago, but we have much more room for improvement," Governor Brian Sandoval said in a statement.

In December, Florida's rate was the lowest since November 2008, 8 percent, and nearly 2 percentage points below its rate in December 2011.

"Trends show that we are also experiencing growth in many different economic indicators that are key to job creation. Housing starts are on the rise, businesses and families continue to move to Florida and more jobs are being created," said Florida Gov. Rick Scott in a statement.

Cuts to local government staffs and construction crews in December were offset by a growing services sector, state data showed.

The trend will likely continue into 2013, with Standard & Poor's saying on Thursday it expects "total nonfarm employment growth to rise 1.6 percent in 2013," in the eastern Atlantic region, which includes Florida, due to increasing tourism.

When looking at nonfarm payroll employment, 27 states added jobs in December from November, while 23 lost jobs. New York's increase of 35,100 jobs was the greatest in the country, followed by New Jersey at 30,200. California shed the most the jobs, 17,500, followed by Florida, 15,300.

The large jumps in New York and New Jersey, and increases in neighboring Connecticut, likely showed the impact of Superstorm Sandy, according to analysts at J.P. Morgan. Employers likely cut jobs in November immediately after the storm, and then boosted their payrolls in December, they said.

"Today's release, beyond confirming that Sandy did some temporary damage to employment in New Jersey and New York, doesn't really provide any new information: the labor market continues its slow improvement along its all too familiar rocky road," said Philippa Dunne and Doug Henwood, who track states' economic conditions for The Liscio Report.

(Additional reporting by Karen Pierog in Chicago, Michael Connor in Miami, and Hilary Russ in New York; Editing by Chizu Nomiyama)

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WASHINGTON | Fri Jan 18, 2013 3:36pm EST

WASHINGTON (Reuters) - A U.S. trade panel on Friday narrowly approved punitive duties for five years on hundreds of millions of dollars of wind towers from China and Vietnam.

The U.S. International Trade Commission voted 3-3 that U.S. producers were either materially injured or threatened with material injury by unfairly priced and subsidized imports from the two countries.

A tie vote goes to the petitioner in U.S. anti-dumping and countervailing duty cases.

The United States imported $222 million of wind towers from China last year and about $79 million from Vietnam.

The tall steel towers support turbines that generate electricity from the wind.

U.S. producers have complained that unfair Asian competition was forcing them to close plants and shed jobs.

The ITC vote clears the way for the Commerce Department to issue anti-dumping and countervailing duty orders on the wind towers.

The department announced its final duty determinations last month in the case.

It set final anti-dumping duties ranging from 44.99 to 70.63 percent on utility-scale towers manufactured in China and additional countervailing duties of 21.86 to 34.81 percent to combat Chinese government subsidies.

The department slapped final anti-dumping duties of 51.40 to 58.49 percent on wind towers from Vietnam. There was not a subsidy component to the complaint against Vietnam.

Importers have been required since last year to post bonds or cash deposits based on preliminary anti-dumping and countervailing duty rates.

(Reporting by Doug Palmer; Editing by Cynthia Osterman)

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