Jen10122
11-14-2003, 05:26 PM
WASHINGTON (Nov. 14) - Output at U.S. factories, mines and utilities rose in October for the fourth straight month, the Federal Reserve said on Friday, and firms used more of their capacity to meet a long-awaited increase in demand.
Industrial production increased 0.2 percent after a revised 0.5 percent gain in September, the Fed said, slightly below the 0.3 percent rise expected by Wall Street economists.
Firms operated at 75.0 percent of full capacity in October, the highest pace since 75.4 percent in February and up slightly from September's 74.9 percent rate. Analysts had expected capacity use to rise slightly to 74.9 percent from the originally reported 74.7 percent pace in September.
Capacity use rates remain well below the traditional inflation threshold of about 82 percent -- a level not seen since the third quarter of 2000. Industry began easing its pace of capacity use as America headed into a recession in 2001, and the rate only began rising again in July.
"Capacity utilization is creeping up but from a very low level and it will be quite a while before we get to levels that in the past have been associated with emerging price pressures," said Jade Zelnik, chief economist, RBS Greenwich Capital Markets.
In a sign the troubled manufacturing sector is on the mend, factory production -- which makes up more than four-fifths of total industrial output -- increased for the second straight month, rising 0.1 percent. The slight degree of the rise was attributed in part to a 3.8 percent drop in motor vehicle production, and followed a 0.7 percent surge in September.
"It looks as though auto production was a major factor holding down the total but I firmly believe that manufacturing is in a recovery and will continue to be so for many months in the future," said Paul Kasriel, chief economist at Northern Trust.
Leading indicators of industrial activity such as new orders of capital equipment have suggested output is ramping up in response to increased demand for manufactured goods. Production, which fell in 2001 and 2002 and for the second quarter of this year, has since surged at a 4.0 percent annual rate -- boosted in part by the sizzling 7.2 percent surge in gross domestic product growth that quarter.
The Fed said utilities output rose 2.0 percent in October, reversing the a 2.0 percent drop in September, while mining output fell 0.8 percent after September's 1.0 percent gain.
11/14/03 10:05 ET
Copyright 2003 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. All active hyperlinks have been inserted by AOL.
Industrial production increased 0.2 percent after a revised 0.5 percent gain in September, the Fed said, slightly below the 0.3 percent rise expected by Wall Street economists.
Firms operated at 75.0 percent of full capacity in October, the highest pace since 75.4 percent in February and up slightly from September's 74.9 percent rate. Analysts had expected capacity use to rise slightly to 74.9 percent from the originally reported 74.7 percent pace in September.
Capacity use rates remain well below the traditional inflation threshold of about 82 percent -- a level not seen since the third quarter of 2000. Industry began easing its pace of capacity use as America headed into a recession in 2001, and the rate only began rising again in July.
"Capacity utilization is creeping up but from a very low level and it will be quite a while before we get to levels that in the past have been associated with emerging price pressures," said Jade Zelnik, chief economist, RBS Greenwich Capital Markets.
In a sign the troubled manufacturing sector is on the mend, factory production -- which makes up more than four-fifths of total industrial output -- increased for the second straight month, rising 0.1 percent. The slight degree of the rise was attributed in part to a 3.8 percent drop in motor vehicle production, and followed a 0.7 percent surge in September.
"It looks as though auto production was a major factor holding down the total but I firmly believe that manufacturing is in a recovery and will continue to be so for many months in the future," said Paul Kasriel, chief economist at Northern Trust.
Leading indicators of industrial activity such as new orders of capital equipment have suggested output is ramping up in response to increased demand for manufactured goods. Production, which fell in 2001 and 2002 and for the second quarter of this year, has since surged at a 4.0 percent annual rate -- boosted in part by the sizzling 7.2 percent surge in gross domestic product growth that quarter.
The Fed said utilities output rose 2.0 percent in October, reversing the a 2.0 percent drop in September, while mining output fell 0.8 percent after September's 1.0 percent gain.
11/14/03 10:05 ET
Copyright 2003 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. All active hyperlinks have been inserted by AOL.