BLBG; Production in U.S. Probably Rose in November, Lifting Economy
By Bob Willis
Dec. 15 (Bloomberg) -- Industries in the U.S. probably boosted production in November for a fifth consecutive month, showing the world’s largest economy is gaining speed heading into 2010, economists said before a report today.
Output at factories, mines and utilities climbed 0.5 percent last month, according to the median forecast of 78 economists surveyed by Bloomberg News, after a 0.1 percent October increase. Other data may show wholesale prices climbed.
Improving global sales and lean inventories are prompting companies such as Ford Motor Co. to rev up assembly lines, giving the expansion a lift. The pickup has yet to lead to more hiring, one reason why Federal Reserve policy makers tomorrow may reiterate a pledge to keep lending rates low for “an extended period.”
“Demand for goods has improved,” said Russell Price, a senior economist at Ameriprise Financial in Detroit. “Combined with tight inventory levels, these dynamics should provide manufacturers with a nice tail wind.”
The Fed’s industrial production figures are due at 9:15 a.m. in Washington. Economists’ estimates ranged from no change to a 0.9 percent increase. Manufacturing accounts for about 12 percent of the U.S. economy.
The report may also show that capacity utilization, or the proportion of plants in use, probably rose to 71.1 percent from 70.7 percent, according to the survey median. The rate averaged 80 percent over the past two decades. Excess capacity is one reason economists anticipate inflation will remain low.
Wholesale Prices
A report from the Labor Department at 8:30 a.m. may show prices paid to producers rose 0.8 percent last month, reflecting higher fuel costs, according to the median forecast of economists surveyed. From a year earlier, wholesale costs probably climbed 1.8 percent.
A report from the Fed Bank of New York at the same time may show manufacturing in that region expanded for a fifth straight month in December, according to the survey.
Auto sales are climbing again after plunging in September, the month after the government’s “cash-for-clunkers” plan expired. General Motors Co., Toyota Motor Corp., Ford and Chrysler Group LLC all posted November sales that beat analysts’ estimates. The seasonally adjusted sales rate was 10.9 million vehicles, up from 10.45 million in October, according to industry figures released this month.
Ford, the only major U.S. automaker to avoid bankruptcy, plans to boost first-quarter North American production by 58 percent from a year earlier to 550,000 vehicles.
Improving Sales
Deere & Co., the world’s largest maker of farm equipment, last week said early order combine sales in North America, those for equipment that won’t be used until the middle of next year, topped its estimates and November demand was better than anticipated.
“Bottom line -- business has strengthened a bit from what we were expecting,” Marie Ziegler, vice president of investor relations, said at a presentation Dec. 10.
Manufacturers are benefiting from rising demand overseas as the global economy recovers from the worst slump since World War II. A 12 percent drop in the value of the dollar from a four-year high on March 3 against its major trading partners is making American goods more competitive. Exports have risen for six consecutive months since reaching a three-year low in April.
The Standard & Poor’s 500 Index is up 5.4 percent so far this quarter after rising 32 percent in the six months to September, the biggest two-quarter gain since 1975, on signs the economy was improving.
Employment Slump
Even so, the economy has lost 7.2 million jobs since the recession began two years ago, the worst employment slump in the post-World War II era. The jobless rate reached a 26-year high of 10.2 percent in October before falling to 10 percent last month.
Fed Chairman Ben S. Bernanke last week said the economy faces “formidable headwinds,” signaling policy makers tomorrow will keep the benchmark interest rate near zero following their last meeting of the year. In comments Dec. 7 at the Economic Club of Washington, he cited a weak labor market and tight credit as ongoing drags “likely to keep the pace of expansion moderate.”
After shrinking an estimated 2.5 percent this year, the economy is set to grow 2.6 percent next year, according to economists surveyed by Bloomberg early this month. The year after the 1981-82 recession, the last time unemployment was this high, the economy expanded 4.5 percent.
Bloomberg Survey
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Empire PPI Ind. Cap.
Manu. Prod. Util.
Index MOM% MOM% %
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Date of Release 12/15 12/15 12/15 12/15
Observation Period Dec. Nov. Nov. Nov.
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Median 24.0 0.8% 0.5% 71.1%
Average 23.2 0.9% 0.5% 71.1%
High Forecast 30.0 1.6% 0.9% 72.0%
Low Forecast 15.6 0.3% 0.0% 70.6%
Number of Participants 55 77 78 70
Previous 23.5 0.3% 0.1% 70.7%
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4CAST Ltd. 22.0 0.9% 0.7% 71.2%
Action Economics 24.0 1.2% 0.6% 71.2%
Aletti Gestielle SGR 24.0 0.6% 0.4% 71.0%
Ameriprise Financial Inc 23.0 0.7% 0.4% 71.0%
Banesto 24.5 --- 0.3% ---
Bank of Tokyo- Mitsubishi 20.2 0.8% 0.2% 70.8%
Bantleon Bank AG 25.8 1.0% 0.3% ---
Barclays Capital 25.0 1.0% 0.6% 71.3%
Bayerische Landesbank --- 0.7% 0.5% 71.0%
BBVA 25.6 0.5% 0.3% 71.0%
BMO Capital Markets 25.0 0.7% 0.4% 71.0%
BNP Paribas 27.0 1.1% 0.6% 71.2%
BofA Merrill Lynch Resear 27.5 1.2% 0.9% 71.3%
Briefing.com 21.0 0.6% 0.7% 71.4%
Calyon 26.0 0.7% 0.5% 71.1%
Capital Economics 20.0 1.5% 0.2% 70.9%
CIBC World Markets --- 0.8% 0.7% 72.0%
ClearView Economics 20.0 0.8% 0.4% 71.0%
Commerzbank AG 25.0 0.3% 0.4% 71.0%
Credit Suisse --- 1.0% 0.5% 71.3%
Daiwa Securities America --- 0.7% 0.4% 70.9%
Danske Bank --- 0.8% 0.4% ---
DekaBank 20.0 0.6% 0.5% 71.1%
Desjardins Group 22.0 0.6% 0.6% 71.1%
Deutsche Bank Securities 25.0 1.2% 0.5% 71.0%
Deutsche Postbank AG --- 0.5% 0.5% ---
Exane 30.0 0.5% 0.8% ---
First Trust Advisors 25.0 1.1% 0.6% 71.2%
Fortis 25.0 0.6% 0.5% ---
FTN Financial --- 0.5% 0.3% 71.0%
Goldman, Sachs & Co. --- 0.7% 0.5% 71.1%
Helaba 22.0 0.8% 0.6% 71.4%
Herrmann Forecasting 26.7 1.2% 0.6% 71.2%
High Frequency Economics 20.0 0.9% 0.5% 71.2%
HSBC Markets 20.0 1.0% 0.5% 71.1%
IDEAglobal 27.0 0.7% 0.6% 71.3%
IHS Global Insight --- 1.6% 0.7% ---
Informa Global Markets 23.0 1.0% 0.6% 71.2%
ING Financial Markets 26.0 0.9% 0.6% 71.1%
Insight Economics 20.0 1.0% 0.5% 71.1%
Intesa-SanPaulo 23.0 0.8% 0.7% 71.2%
J.P. Morgan Chase 25.0 1.0% 0.9% 71.4%
Janney Montgomery Scott L --- 1.2% 0.3% 71.0%
Jefferies & Co. 20.0 0.7% 0.3% 71.0%
Johnson Illington Advisor 28.0 0.7% 0.1% 70.6%
Landesbank Berlin --- 0.3% 0.2% 70.8%
Landesbank BW 25.0 0.4% 0.5% 71.2%
Maria Fiorini Ramirez Inc --- 1.2% 0.6% 71.2%
MF Global 19.0 1.2% 0.6% 71.2%
MFC Global Investment Man --- 0.5% 0.4% 71.0%
Moody’s Economy.com 23.9 1.0% 0.8% 71.3%
Morgan Keegan & Co. --- 0.7% 0.6% 71.2%
Morgan Stanley & Co. --- 1.5% 0.5% 71.1%
National Bank Financial --- 0.8% --- ---
Natixis --- 0.5% 0.3% 70.9%
Nomura Securities Intl. 20.0 0.6% 0.5% 71.0%
Nord/LB 20.0 0.8% 0.7% 71.3%
PNC Bank --- 1.0% 0.4% 71.1%
Raiffeisen Zentralbank 25.0 0.4% 0.7% 71.3%
Raymond James --- 0.6% 0.5% 71.3%
RBC Capital Markets 21.0 0.9% 0.5% 71.1%
RBS Securities Inc. --- 1.0% 0.3% 70.9%
Ried, Thunberg & Co. 24.0 1.5% 0.7% 71.2%
Schneider Foreign Exchang --- 1.2% 0.8% 71.0%
Scotia Capital 26.0 0.7% 0.4% 72.0%
Societe Generale 25.0 0.9% 0.8% 71.4%
Standard Chartered 25.0 0.9% 0.6% 71.2%
Stone & McCarthy Research 15.6 0.8% 0.2% 70.8%
TD Securities 25.0 0.9% 0.5% 71.3%
Thomson Reuters/IFR 20.0 0.9% 0.0% 70.7%
Tullett Prebon 25.0 0.8% 0.6% 71.2%
UBS 18.0 1.4% 0.7% 71.2%
UniCredit Research --- --- 0.5% 71.0%
University of Maryland --- 1.0% 0.5% 71.1%
Wells Fargo & Co. --- 0.5% 0.5% 71.2%
WestLB AG 25.5 0.7% 0.3% 70.9%
Westpac Banking Co. 20.0 0.3% 0.2% ---
Woodley Park Research 17.2 1.0% 0.8% 71.4%
Wrightson Associates 24.0 1.5% 0.7% 71.2%
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To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net
