Business World

Tuesday 25 July 2017

US industrial output up 0.4pc as demand grows

Industrial production in the US increased more than forecast in November as consumer prices slowed, indicating the recovery is gaining momentum without generating inflation.

Output at factories, mines and utilities rose 0.4pc, the biggest gain since July, after a revised 0.2pc drop in October, a Federal Reserve report showed yesterday in Washington.

The consumer-price index climbed 0.1pc in November after a 0.2pc gain the previous month, the Labor Department said.

Assembly lines are speeding up as business investment and exports grow and consumer spending accelerates, helping to buoy an expansion that Fed policy makers said yesterday isn't strong enough to reduce a jobless rate hovering near 10pc.

Price increases that are below central bankers' goal will boost the case to maintain the Fed's purchases of $600bn in securities through June to spur growth.

"The manufacturing sector continues to heal itself," said John Herrmann, a senior fixed-income strategist at State Street Global Markets in Boston. "The outlook for business spending on equipment and software remains very positive."

Fed chairman Ben Bernanke "is unlikely to withdraw accommodation until he sees a clear upward turning point in core inflation and a downward turn in unemployment".

Stocks in the US rallied after the report overshadowed concern Europe's debt crisis will worsen. Economists forecast a 0.3pc gain in production, according to the median of 75 projections in a Bloomberg News survey.

The Standard & Poor's 500 Index gained 0.1pc to 1,243.04 in New York. Treasury securities rose on the smaller-than-forecast increase in consumer prices, sending the yield on the benchmark 10-year note down to 3.41pc from 3.48pc late yesterday.

Factory production increased 0.3pc for a second month, the Fed's report showed, led by a 0.9pc increase in business equipment, including computers, communications equipment and semiconductors.

Rising international demand and the need to replace ageing equipment is a boon to manufacturers.

Exports rose to a two-year high in October, Commerce Department figures showed on December 10. Business spending on equipment and software advanced at a 17pc annual rate in the third quarter.

(Bloomberg)

Irish Independent

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