Factory production in U.S. increases less than forecast

Factory production in the U.S. rose less than forecast in September, indicating a pause in manufacturing leading into the budget battle that partially closed the federal government.

Output at factories rose 0.1% after a revised 0.5% gain in August that was smaller than initially estimated, figures from the Federal Reserve showed today in Washington. The median forecast of economists in a Bloomberg survey called for a 0.3% September gain. Total industrial production, which also includes output by mines and utilities, advanced 0.6% as higher temperatures drove up electricity use.

The figures showed declines in production of such non- durable goods as chemicals and textiles, while output of autos and business equipment rose. An acceleration in manufacturing, which accounts for about 12% of the economy, depends on whether corporate confidence improves in wake of the partial government shutdown that lasted for half of October.

“We are in a kind of status-quo, muddle-along mode,” Eric Green, global head of foreign exchange and rates at TD Securities USA LLC in New York, said before the report. “You’ve also had a bit of a hiccup here in terms of business confidence” because of the budget battle in Washington, he said.

Stock-index futures were little changed after the figures, with the contract on the Standard & Poor’s 500 Index expiring in December falling less than 0.1% to 1,753.3 at 9:19 a.m. in New York.

Economists’ Forecasts

The median forecast in a Bloomberg survey of 85 economists called for a 0.4% advance in September industrial production. Estimates ranged from a drop of 0.3% to an increase of 0.8%. Manufacturing, which accounts for about 75% of total production, was previously reported as rising 0.7% in August.

Factory production in China has shown signs of picking up. Industrial output in September climbed 10.2% from the same month last year, according to Oct. 18 figures from the Beijing-based National Bureau of Statistics. In June, the year- over-year increase was 8.9%.

In the euro area, the pace of manufacturing growth has been more limited. An index of factory output in the region increased to 51.3 in October from 51.1 a month earlier and 51.4 in August, according to London-based Markit Economics.

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