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 Manufacturing output rose 0.3 percent last month, up from 0.1
percent in September, the Federal Reserve reported Friday. Factory
output is the biggest component of industrial production, which also
includes mining and utilities. Overall industrial production fell 0.1 percent after a 0.7 percent
September gain. The mining sector, which includes oil and gas
drilling, declined 1.6 percent after six months of gains. Utility
output fell 1.1 percent. Manufacturing has been gaining strength in recent months. Output has
risen in five of the past six months. And factories have stepped up
hiring over the past three months, according to the government's
October employment report released last week.
 Factories are busier in part because overseas growth has picked up
and the housing recovery has driven more demand for furniture and
other wood products. Automakers are also having their best year for
sales since the recession, although production of motor vehicles and
parts fell 1.3 percent in October after two months of gains. Output of primary metals such as steel rose 1.1 percent and
furniture production was up 1.5 percent. Economists were encouraged by the gains in manufacturing after a
period of weakness in the spring and early summer. They predicted
those increases would continue, helped by strengthening overseas
demand and less impact from federal government spending cuts and tax
increases. "As long as the overseas recovery continues and the domestic fiscal
drag fades, output should continue to grow at reasonable rates,"
said Paul Dales senior U.S. economist at Capital Economics.
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The government report was the latest sign of strength for
manufacturing. A private sector report from the Institute for Supply
Management showed factory activity climbed to a 2 ½ year high in
October. The group's manufacturing index has risen for five straight
months. The October gain was especially encouraging because it
showed the federal government's 16-day partial shutdown had little
effect on manufacturers. The overall economy grew at an annual rate of 2.8 percent in the
July-September quarter. But 0.8 percentage point of that growth came
from a buildup in business stockpiles. Many economists believe
businesses will cut back on stockpiling in the current
October-December period and that will slow growth. Manufacturers are hoping that rising export sales will offset
weakness in domestic demand. Through the first nine months this year, exports are up a modest 1
percent. U.S. companies have had to deal with weakness in Europe,
which has cut into sales in that important market.
[Associated
Press; MARTIN CRUTSINGER, AP Economics Writer]
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