Factory output rises on truck, airplane demand

Friday, October 14, 2011, Vol. 35, No. 41

WASHINGTON (AP) — Factory output rose for a third straight month in September, a sign the U.S. economy is growing slowly. Manufacturers made more airplanes, trucks and home electronics to meet rising demand.

The Federal Reserve said Monday that factory output increased 0.4 percent in September after gaining 0.3 percent in August.

Production of business equipment rose 1 percent, the third straight increase of 1 percent or more. Transit equipment and information processing equipment drove the gain.

Auto output increased for a third straight month, home electronics production for a fifth.

Overall industrial production edged up 0.2 percent. It was unchanged in August. Utility output decreased sharply, while mines continued to produce more.

Industrial production is has increased 12.8 percent since June 2009. It remains 5.8 percent below its recent peak, reached in September 2007.

Increased output at U.S. factories could help the economy rebound from its summer slump.

Manufacturing played a crucial role in the early stages of the recovery. Factories were among the first businesses to start growing after the recession officially ended in June 2009.

However, manufacturing slowed this spring. Consumers cut back on purchases in the face of higher prices for gas and food. And the March earthquake in Japan disrupted supply chains, which slowed U.S. auto production.

Manufacturers cut 13,000 jobs in September and 4,000 in August, according to government data. The average length of a factory worker's week declined as well.

Strong export growth has helped manufacturers expand over the past two years. But shipments to overseas buyers might be hurt by the stronger dollar. A more powerful currency makes U.S. goods appear more expensive to foreign buyers.

Slower growth in emerging markets also is reducing demand for U.S. factory goods, economists say.

There have been some positive signs for factories. The Institute for Supply Management's manufacturing production index rose to 51.2 in September from 48.6 in August. Any result over 50 represents expansion.

Retail sales in September rose 1.1 percent, the most in seven months, the government said Friday. Strong spending by consumers can translate into demand for factory goods, but that often takes months to appear in the production report.