US factory output rose strongly in October

[November 17, 2011]  WASHINGTON (AP) -- U.S. industrial production rose in October at the fastest rate in three months. Factories made more trucks, electronics and business equipment, a sign that manufacturing is recovering after slowing this spring.

Output at the nation's factories, utilities and mines rose 0.7 percent last month, the Federal Reserve said Wednesday.

Factory output, the largest component of industrial production, rose a solid 0.5 percent, the fourth straight monthly gain. Production of business equipment rose 1 percent, its sixth straight monthly increase. Electrical equipment, appliances and transportation equipment all climbed more than 2 percent. Autos and parts surged 3.1 percent.

Industrial production has increased 13.4 percent since its trough in June 2009. It remains 5.3 percent below its pre-recession peak, reached in September 2007.

Factory activity slowed this spring, largely because the Japan crises disrupted supply chains and also because consumers cut back on big purchases in the face of higher prices for gas and food.

Energy prices have moderated since then. In a separate report, the Labor Department said consumer prices fell for the first time since June. The key reason was cheaper energy costs.

Automakers are also rebounding. In October, car sales were 7 percent higher than the same month last year, the government said Tuesday. Many U.S. auto plants, which depend upon parts from Japan to produce various models, are seeing supply chains flow more freely.

The economy grew at an annual rate of 2.5 percent in the July-September quarter, the best quarterly performance in a year. Many economists project similar growth for the October-December quarter, a view bolstered by Tuesday's report that retail sales rose in October for the fifth straight month.

Still, consumers might not be able to sustain their spending growth if unemployment remains high and pay raises scant. And Europe may be on the brink of a recession that could further slow U.S. growth next year.

The outlook for hiring remains mixed. In October, employers created just 80,000, the smallest gain in four months. But the government also said employers added more jobs in August and September than it had initially reported and the unemployment rate dipped to 9 percent.

Other reports suggest the manufacturing sector is growing at a slow and steady pace.

The Institute for Supply Management said its manufacturing index slipped in October to 50.8, down from 51.6 in September. Any reading above 50 indicates expansion.

Even with the small decline, the ISM reading marked the 27th consecutive month of growth for the manufacturing sector.

[Associated Press; By DANIEL WAGNER]

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