U.S. Factory Production Rose by Most in Three Months in October
2010-11-16 14:15:00.16 GMT
By Courtney Schlisserman
Nov. 16 (Bloomberg) -- Factory production in the U.S.
increased in October by the most in three months, signaling
industries continue to support the U.S. economic recovery.
Manufacturing rose 0.5 percent after a 0.1 percent increase
in September that was previously reported as a 0.2 percent drop,
figures from the Federal Reserve showed today. Total production
was little changed, restrained by the biggest drop in utility
use in six months that was probably caused by unseasonably mild
temperatures last month.
Gains in exports and business investment may keep assembly
lines churning, just as the initial spark from the need to
rebuild inventories wanes. The increases in global demand that
benefitted companies like General Electric Co. and helped lift
the economy gave American consumers time to repair finances and
resume spending, leading to a more balanced recovery.
"Manufacturing output should be strengthening into the end
of the year," Zach Pandl, an economist at Nomura Securities
International Inc. in New York, said before the report. What's
supporting growth is "a little bit better domestic demand and
fantastic growth overseas."
Economists surveyed by Bloomberg News projected total
industrial production would increase 0.3 percent after a 0.2
percent decline for September, according to the median of 78
forecasts. Estimates ranged from no change to a gain of 0.7
percent.
Another report today showed wholesale costs rose 0.4
percent in October from the prior month, less than forecast,
reflecting declines in prices of cars, trucks and computers that
shows limited demand is keeping a lid on inflation, according to
figures from the Labor Department.
Utility Use
Capacity utilization, which measures the amount of a plant
that is in use, was unchanged at 74.8 percent last month, the
production report showed. The gauge averaged 80 percent over the
past 20 years, showing there's enough spare plant equipment and
space to prevent bottlenecks that would lead prices higher.
The gain in factory output was led by makers of autos,
computers and communications gear.
Utility production dropped 3.4 percent after a 2.2 percent
decrease the prior month. Temperatures for the month averaged
56.9 degrees, making it the eleventh-warmest October on record,
according to the National Oceanic and Atmospheric
Administration.
Mining, which includes oil drilling, fell 0.1 percent.
Carmakers increased output by 1.6 percent last month after
little change in September.
Auto Sales
Auto sales in October reached a 12.3 million annual pace,
the highest in more than year, according to researcher Autodata
Corp. Ford Motor Co. said its sales rose 15 percent in October
and demand for its F-Series pickups increased 24 percent,
pushing deliveries past last year's total in the first 10 months
of 2010.
"That's a good harbinger of the economy starting to move
forward," Ken Czubay, Ford's U.S. sales chief, said on a
conference call with analysts. "It's good to see the industry
nudging forward."
Previous reports pointed to an October rebound in
manufacturing, which makes up 11 percent of the U.S. economy.
The Institute for Supply Management's factory gauge rose in
October to the highest level in five months, reflecting
acceleration in orders and production. Factories also boosted
the workweek by 0.2 percent last month, enough to overcome a
7,000 drop in payrolls, figures from the Labor Department
showed.
November Drop
The first of this month's regional factory reports raised
the risk that the rebound will prove to be short-lived.
Manufacturing in the region covered by the Fed Bank of New York
unexpectedly contracted in November for the first time in more
than a year, the branch of the central bank said yesterday.
Some Fed policy makers are concerned economic growth is not
strong enough to reduce an unemployment rate close to 10
percent. At the same time, inflation remains below the Fed's
longer-term projections. The central bank this month announced a
program to buy an additional $600 billion in Treasury securities
in a bid to keep borrowing costs low and spur growth.
Foreign sales remain a bright spot. Exports in September
rose to the highest level in two years, according to Commerce
Department data released Nov. 10.
General Electric Chief Executive Officer Jeffrey Immelt
last week appointed Vice Chairman John Rice to accelerate a push
to bolster exports and expand partnerships in countries like
China and India that are modernizing infrastructure to foster
faster economic growth.
Emerging Markets
"The growth in the next decade or decades that's going to
take place will be quite robust in places like China and
India," Immelt said Nov. 9 in Beijing. GE is based in
Fairfield, Connecticut.
Some businesses are also responding to increased exports
and to a pickup in U.S. demand by replacing aging equipment and
bringing more parts of their plants online.
Rockwell Automation Inc., the maker of factory software,
said it sees interest rising in large-scale plant projects for
full-production lines in developed markets, a sign that those
economies may be picking up steam.
"These are projects that are significant expansion in
production capacity or new lines," Chief Executive Officer
Keith Nosbusch said in an interview last week. "These would be
larger capital spending investments," which means those markets
have a more positive outlook on their future.
For Related News and Information:
Stories on U.S. manufacturing: TNI US MAC <GO>
Bloomberg stories on the U.S. economy: NI USECO BN <GO>
Stories on U.S. automakers: TNI US AUT <GO>
To track capacity utilization: CPTICHNG <Index> GP <GO>
--Editors: Carlos Torres, Christopher Wellisz
To contact the reporter on this story:
Courtney Schlisserman in Washington +1-202-624-1943 or
cschlisserma@bloomberg.net.
To contact the editor responsible for this story:
Christopher Wellisz at +1-202-624-1862 or
cwellisz@bloomberg.net
Company News:
GE US <Equity> CN
CMI US <Equity> CN
2010-11-16 14:15:00.16 GMT
By Courtney Schlisserman
Nov. 16 (Bloomberg) -- Factory production in the U.S.
increased in October by the most in three months, signaling
industries continue to support the U.S. economic recovery.
Manufacturing rose 0.5 percent after a 0.1 percent increase
in September that was previously reported as a 0.2 percent drop,
figures from the Federal Reserve showed today. Total production
was little changed, restrained by the biggest drop in utility
use in six months that was probably caused by unseasonably mild
temperatures last month.
Gains in exports and business investment may keep assembly
lines churning, just as the initial spark from the need to
rebuild inventories wanes. The increases in global demand that
benefitted companies like General Electric Co. and helped lift
the economy gave American consumers time to repair finances and
resume spending, leading to a more balanced recovery.
"Manufacturing output should be strengthening into the end
of the year," Zach Pandl, an economist at Nomura Securities
International Inc. in New York, said before the report. What's
supporting growth is "a little bit better domestic demand and
fantastic growth overseas."
Economists surveyed by Bloomberg News projected total
industrial production would increase 0.3 percent after a 0.2
percent decline for September, according to the median of 78
forecasts. Estimates ranged from no change to a gain of 0.7
percent.
Another report today showed wholesale costs rose 0.4
percent in October from the prior month, less than forecast,
reflecting declines in prices of cars, trucks and computers that
shows limited demand is keeping a lid on inflation, according to
figures from the Labor Department.
Utility Use
Capacity utilization, which measures the amount of a plant
that is in use, was unchanged at 74.8 percent last month, the
production report showed. The gauge averaged 80 percent over the
past 20 years, showing there's enough spare plant equipment and
space to prevent bottlenecks that would lead prices higher.
The gain in factory output was led by makers of autos,
computers and communications gear.
Utility production dropped 3.4 percent after a 2.2 percent
decrease the prior month. Temperatures for the month averaged
56.9 degrees, making it the eleventh-warmest October on record,
according to the National Oceanic and Atmospheric
Administration.
Mining, which includes oil drilling, fell 0.1 percent.
Carmakers increased output by 1.6 percent last month after
little change in September.
Auto Sales
Auto sales in October reached a 12.3 million annual pace,
the highest in more than year, according to researcher Autodata
Corp. Ford Motor Co. said its sales rose 15 percent in October
and demand for its F-Series pickups increased 24 percent,
pushing deliveries past last year's total in the first 10 months
of 2010.
"That's a good harbinger of the economy starting to move
forward," Ken Czubay, Ford's U.S. sales chief, said on a
conference call with analysts. "It's good to see the industry
nudging forward."
Previous reports pointed to an October rebound in
manufacturing, which makes up 11 percent of the U.S. economy.
The Institute for Supply Management's factory gauge rose in
October to the highest level in five months, reflecting
acceleration in orders and production. Factories also boosted
the workweek by 0.2 percent last month, enough to overcome a
7,000 drop in payrolls, figures from the Labor Department
showed.
November Drop
The first of this month's regional factory reports raised
the risk that the rebound will prove to be short-lived.
Manufacturing in the region covered by the Fed Bank of New York
unexpectedly contracted in November for the first time in more
than a year, the branch of the central bank said yesterday.
Some Fed policy makers are concerned economic growth is not
strong enough to reduce an unemployment rate close to 10
percent. At the same time, inflation remains below the Fed's
longer-term projections. The central bank this month announced a
program to buy an additional $600 billion in Treasury securities
in a bid to keep borrowing costs low and spur growth.
Foreign sales remain a bright spot. Exports in September
rose to the highest level in two years, according to Commerce
Department data released Nov. 10.
General Electric Chief Executive Officer Jeffrey Immelt
last week appointed Vice Chairman John Rice to accelerate a push
to bolster exports and expand partnerships in countries like
China and India that are modernizing infrastructure to foster
faster economic growth.
Emerging Markets
"The growth in the next decade or decades that's going to
take place will be quite robust in places like China and
India," Immelt said Nov. 9 in Beijing. GE is based in
Fairfield, Connecticut.
Some businesses are also responding to increased exports
and to a pickup in U.S. demand by replacing aging equipment and
bringing more parts of their plants online.
Rockwell Automation Inc., the maker of factory software,
said it sees interest rising in large-scale plant projects for
full-production lines in developed markets, a sign that those
economies may be picking up steam.
"These are projects that are significant expansion in
production capacity or new lines," Chief Executive Officer
Keith Nosbusch said in an interview last week. "These would be
larger capital spending investments," which means those markets
have a more positive outlook on their future.
For Related News and Information:
Stories on U.S. manufacturing: TNI US MAC <GO>
Bloomberg stories on the U.S. economy: NI USECO BN <GO>
Stories on U.S. automakers: TNI US AUT <GO>
To track capacity utilization: CPTICHNG <Index> GP <GO>
--Editors: Carlos Torres, Christopher Wellisz
To contact the reporter on this story:
Courtney Schlisserman in Washington +1-202-624-1943 or
cschlisserma@bloomberg.net.
To contact the editor responsible for this story:
Christopher Wellisz at +1-202-624-1862 or
cwellisz@bloomberg.net
Company News:
GE US <Equity> CN
CMI US <Equity> CN
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