U.S. Factory Output Rises for Fifth Straight Month

Motorola Smartphone Plant
LM Otero/APWorkers at a Motorola smartphone plant in Fort Worth, Texas.
By JOSH BOAK

WASHINGTON -- U.S. factory output rose for a fifth straight month in December, as manufacturers cranked out more cars and trucks, appliances and processed food. The gains suggest factories gave economic growth a strong boost at the end of the year.

The Federal Reserve said Friday that factory production rose 0.4 percent in December. That follows gains of 0.6 percent in both November and October. Automakers increased their production 1.8 percent last month and 10.4 percent year over year.

Higher consumer demand is driving much of the increased manufacturing activity. Production of appliances, furniture, carpeting, food and clothing all grew in December. Output of consumer goods gained 0.5 percent.

Overall industrial production, which includes manufacturing, mining and utilities, increased 0.3 percent in December. That's also the fifth straight monthly gain.

Total production increased 3.7 percent over the last 12 months and has surpassed its pre-recession peak. Output is now 22 percent above its recession low hit in June 2009, the month the downturn ended.

Other indicators point to continued manufacturing strength.
Factory orders climbed 1.8 percent in November. A surge in aircraft demand led the increase in orders, while businesses stepped up spending on machinery, computers and other long-lasting goods.

And despite a slowdown in hiring last month across the broader economy, factories added jobs for the fifth straight month in December.

Rising factory orders should help keep economic growth solid in the October-December quarter. Several economists project growth at a 3 percent annual rate in that period after a 4.1 percent rate in the previous quarter.

There are signs that the rate of growth for factory production could slow.

Automakers drove much of the improvement in industrial production through the end of last year, as motor vehicle sales jumped 8 percent to 15.6 million last year.

However, many industry analysts expect the pace of buying to decline in 2014. Cars and trucks are lasting longer and families are unlikely to splurge on extra vehicles until the economy kicks into higher gear. That could signal slower growth in factory output in the coming months.

Overall economic growth remains modest by historical standards. And though factory orders have strengthened in recent months, the rate of growth has slowed during the recovery from the 2008 financial crisis.


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Valerie

While I would be the first one to agree that more job creation is needed, there is no escaping the fact that an American economy in depression is not a good signal to ramp up production of big-ticket consumer items.

WHAT the heck are these manufacturers thinking --- and WHO do they think is going to BUY all this stuff???

January 17 2014 at 2:02 PM Report abuse rate up rate down Reply
2 replies to Valerie's comment
wfreeberg

Job creation is one thing but what about us being able to provide qualified candidates for those new jobs. Our high school drop out rate is approaching 20% and getting worse every year. Those new jobs, manufacturing, services, etc. require a high level of technical skills. You can't even service an automobile without using a computer.

January 18 2014 at 6:58 AM Report abuse rate up rate down Reply
drpmindmender

Perhaps you should visit all these companies and explain it to them, since you seem to think you know more than they do. It could lead to a new career for you as a business consultant that will keep you so busy, you won't have time to blah, blah, blah on this blog...

...Nah, we couldn't be so lucky.

January 20 2014 at 9:26 PM Report abuse +1 rate up rate down Reply