Industrial production in the U.S. rose more than forecast in September, partially reversing the prior month’s slump, indicating manufacturers are regaining their footing.
Output at factories, mines and utilities rose 0.4 percent after a 1.4 percent decline in August that was the biggest since March 2009, the Federal Reserve reported today in Washington. The median estimate in a Bloomberg survey of 85 economists called for production to rise 0.2 percent. Manufacturing, which makes up 75 percent of the total, climbed 0.2 percent.
The biggest two-month gain in retail sales in almost two years may mean demand from American consumers is making up for slowing sales overseas and declining business investment as the so-called fiscal cliff approaches. A pickup in manufacturing would help give the world’s largest economy a lift.
“The sector is now stabilizing,” Russell Price, senior economist at Ameriprise Financial Inc. in Detroit, said before the report. “We’re now in a situation where it’s getting less bad. We’re growing, but we’re not quite there yet. It’s going to be treading water through the end of the year.”
Estimates in the Bloomberg survey ranged from a drop of 1 percent to an increase of 0.7 percent. The prior month was previously reported as a decline of 1.2 percent. Manufacturing accounts for about 12 percent of the economy.
Capacity utilization, which measures the extent to which plants are achieving their full potential output, rose to 78.3 percent from 78 percent.
The cost of living in the U.S. rose in September for a second month, reflecting a jump in energy expenses that failed to trickle through to other goods and services, a report today from the Labor Department also showed.
The consumer-price index increased 0.6 percent for a second month. Economists surveyed by Bloomberg had forecast a 0.5 percent advance. The so-called core measure, which excludes more volatile food and energy costs, climbed 0.1 percent, less than projected.
Stock-index futures held earlier gains after the reports. The contract on the Standard & Poor’s 500 Index maturing in December climbed 0.5 percent to 1,442.9 at 9:17 a.m. in New York as companies from Johnson & Johnson to UnitedHealth Group Inc. raised their 2012 profit forecasts.
The Fed report showed the output of consumer goods was little changed last month as a slowdown in auto assemblies was offset by pickups in the manufacturing of appliances and clothing.
Retail sales climbed 1.1 percent in September following a 1.2 percent increase the prior month, the best back-to-back showing since late 2010, Commerce Department figures showed yesterday.
Production of motor vehicles and parts decreased 2.5 percent after a 5.1 percent drop a month earlier. The decrease is at odds with improving sales and may indicate automakers are trying to trim inventories. Cars and light trucks sold at a 14.9 million annual pace in September, the most since March 2008, according to Ward’s Automotive Group. Chrysler Group LLC and General Motors Co. reported gains.
“We continue to be encouraged by positive signs from the housing sector, lower jobless claims, higher consumer sentiment and higher consumer spending,” Kurt McNeil, GM’s vice president of U.S. sales, said on an Oct. 2 conference call. “The stiffest headwinds are uncertainty, some of which is related to the sovereign debt crisis in Europe and concerns about the pace of growth here at home.”
Excluding autos and parts, manufacturing production climbed 0.4 percent after decreasing 0.6 percent in August.
Mining production, which includes oil drilling, increased 0.9 percent in September after falling 1.6 percent the prior month.
Companies that provide equipment for natural gas shale drilling have been hurt by cooling global demand for energy, with the number of operating on-shore rigs falling last month to the lowest in a year.
Houston-based Schlumberger Ltd., the third-largest fracking-service provider in the U.S., is mothballing pressure- pumping equipment. At Chesapeake Energy Corp. in Oklahoma City, Oklahoma, the number of gas rigs are down by 90 percent, Senior Vice President Jeff Mobley said at an Oct. 11 conference.
Utility output advanced 1.5 percent after a 4.3 percent drop in August.
Today’s Fed report also showed output of business equipment rebounded 0.8 percent last month after falling 0.9 percent in August. Machinery output climbed 0.4 percent after falling 0.6 percent, and construction supplies gained 1.3 percent.