october

By Bob Willis Dec. 15 (Bloomberg) — Industries in the U.S. boosted production in November by the most in three months, showing the world’s largest economy is gaining speed heading into 2010. Output at factories, mines and utilities climbed 0.8 percent, after no change in October, the Federal Reserve said today in Washington. Manufacturing and mining rose, while warmer weather restrained utility demand. Capacity utilization, which measures the proportion of plants in use, increased. Improving global sales and leaner inventories are prompting companies such as Ford Motor Co. to rev up assembly lines, giving the expansion a lift. The pickup has yet to boost hiring, one reason why Fed policy makers tomorrow may reiterate a pledge to keep lending rates near zero for “an extended period.” “We’ll continue to see growth in manufacturing output, given strong exports and that consumers are spending,” said Michael Feroli , an economist at JPMorgan Chase & Co. in New York, who forecast a production gain of 0.9 percent. “You’re seeing a decent amount of breadth in terms of the increases.” Stock futures were lower after the report and separate releases that showed higher producer prices and slower growth at New York-area factories. The contract on the Standard & Poor’s 500 Index was down 0.4 percent to 1,104 at 9:24 a.m. in New York. A report from the Labor Department earlier today showed prices paid to producers rose 1.8 percent last month. Excluding fuel and food, prices increased 0.5 percent. New York Manufacturing Factories in the New York region expanded less than anticipated this month, figures from the Fed Bank of New York also showed. The bank’s general economic gauge, known as the Empire State Index , fell to a five-month low of 2.6 from 23.5 in November. Readings greater than zero signal expansion. Industrial production was forecast to increase 0.5 percent after a previously reported 0.1 percent gain in October, according to the median estimate of 78 economists surveyed by Bloomberg News. Projections ranged from no change to a gain of 0.9 percent. Capacity use rose to 71.3 percent last month from 70.6 percent in October. It was forecast to rise to 71.2 percent, according to the Bloomberg survey median. The rate averaged 80 percent over the past two decades. Excess capacity is one reason economists anticipate inflation will remain low. The Fed’s report showed production at manufacturers increased 1.1 percent in November, the most in three months, after a 0.2 percent decline in October. Production of business equipment rose 0.4 percent, while output of computers and electronics also increased 0.4 percent. Warmer Weather Utility production declined 1.8 percent after a 1.7 percent rise. Last month was the third-warmest November in 115 years in the U.S., according to the National Climatic Data Center. Mining output, which includes oil drilling, increased 2.1 percent. Motor vehicle and parts production rose 1.8 percent following a 1.8 percent decrease the prior month. Automobile production is moderating after surging in the three months through September as “cash-for-clunkers” incentives to purchase cars expired in late August. Auto sales are climbing again after plunging in September. General Motors Co., Toyota Motor Corp., Ford and Chrysler Group LLC all posted November sales that beat analysts’ estimates. The seasonally adjusted annual sales rate was 10.9 million vehicles, up from 10.45 million in October, according to industry figures released this month. Ford, the only major U.S. automaker to avoid bankruptcy, plans to boost first-quarter North American production by 58 percent from a year earlier to 550,000 vehicles. Excluding Auto Production Excluding automobiles, manufacturing output increased 1.1 percent, the most in three months. Consumer durable goods output, which includes automobiles, furniture and electronics, rose 1.5 percent. Production of industrial materials rose 1.3 percent in November, the most in three months. Deere & Co., the world’s largest maker of farm equipment, last week said early-order combine sales in North America, those for equipment that won’t be used until the middle of next year, topped its estimates and November demand was better than anticipated. “Bottom line — business has strengthened a bit from what we were expecting,” Marie Ziegler , vice president of investor relations, said at a presentation Dec. 10. Global Growth Manufacturers are benefiting from rising demand overseas as the global economy recovers from the worst slump since World War II. A 12 percent drop in the value of the dollar from a four- year high on March 3 against its major trading partners is making American goods more competitive. Exports have risen for six consecutive months since reaching a three-year low in April. Even so, the economy has lost 7.2 million jobs since the recession began two years ago, the worst employment slump in the post-war era. The jobless rate reached a 26-year high of 10.2 percent in October before falling to 10 percent last month. Fed Chairman Ben S. Bernanke last week said the economy faces “formidable headwinds,” signaling policy makers tomorrow will keep the benchmark interest rate near zero following their last meeting of the year. In comments Dec. 7 at the Economic Club of Washington, he cited a weak labor market and tight credit as ongoing drags “likely to keep the pace of expansion moderate.” After shrinking an estimated 2.5 percent this year, the economy is set to grow 2.6 percent pace next year, according to economists surveyed by Bloomberg early this month. The year after the 1981-82 recession, the last time unemployment was this high, the economy grew 4.5 percent. To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net .