Industrial production in the U.S. increased more than forecast in November, helped by gains in computers, home electronics and appliances, signaling factories will support economic growth into next year. Output at factories, mines and utilities rose 0.4 percent, the biggest gain since July, after a revised 0.2 percent drop in October, figures from the Federal Reserve showed today in Washington. Economists forecast a 0.3 percent gain, according to the median of 75 projections in a Bloomberg News survey. Manufacturing rose 0.3 percent for a second month. Assembly lines are speeding up as business investment and exports grow and consumer spending accelerates. Manufacturing will continue to play a role in the economic recovery, which Fed policy makers yesterday said was not strong enough to reduce a jobless rate that’s been hovering near 10 percent. ”The rebound in manufacturing continues at a solid pace,” Peter Newland, an economist at Barclays Capital Inc. in New York, said in a note to clients. Economists’ estimates ranged from a decrease of 0.1 percent to a gain of 0.8 percent. Manufacturing in the New York region rebounded more than forecast in December after contracting for the first time in more than a year, a report from the New York Fed also showed today. The bank’s general economic index climbed to 10.6 from minus 11.1 in November. Readings greater than zero signal expansion in the so-called Empire State Index, which covers New York, northern New Jersey and southern Connecticut. Low Prices Also today, a report from the Labor Department showed the cost of living rose less than forecast in November, indicating higher prices for commodities such as fuel aren’t filtering through into other goods and services. The consumer-price index increased 0.1 percent after a 0.2 percent rise the prior month. Stocks were little changed as investors fretted over a possible downgrade of Spanish debt, which would intensify the crisis in Europe. The Standard & Poor’s 500 Index rose 0.1 percent to 1,242.73 at 10:02 a.m. in New York. Treasury securities rose, sending the yield on the benchmark 10-year note down to 3.40 percent from 3.48 late yesterday. Capacity utilization, which measures the amount of a plant that is in use, increased to 75.2 percent last month, the highest level since October 2008, the production report showed. The gauge averaged 80 percent over the past 20 years, signaling there’s enough spare plant equipment and space to prevent bottlenecks that would lead prices higher. Demand for Electronics The gain in factory output was led by a 0.9 percent increase in business equipment, including computers, communications equipment and semiconductors. Output of appliances and furniture climbed 1.4 percent and that of home electronics increased 0.9 percent. Utility production rose 1.9 percent, the most since June. Temperatures in November were within the average range after the 11th-warmest October on record, according to the National Oceanic and Atmospheric Administration. Mining, which includes oil drilling, fell 0.1 percent. Carmakers decreased output by 6 percent last month, the first drop since August, even as demand climbed, indicating production may rebound in coming months. Auto Sales Climb Auto sales in November reached a 12.26 million annual pace, the highest in more than year, according to researcher Autodata Corp. The rate over the last three months is the highest since July through September 2008. “We continue to see a gradual rise in overall industry demand,” Don Johnson, General Motors Co.’s vice president of U.S. sales, said Dec. 1 on a conference call. “Consumers are still cautious. We’re starting to see an inclination for people to come back into dealerships.” Ford Motor Co., the world’s most profitable automaker, is hiring 1,800 workers and spending $600 million to overhaul a factory in Louisville, Kentucky, to build small sport-utility vehicles, spokeswoman Marcey Evans said Dec. 9. Factory output excluding motor vehicles, rose 0.7 percent in November, today’s report showed, the biggest gain since May. Previous reports showed the rate of manufacturing expansion was steady in November. The Institute for Supply Management’s manufacturing index was little changed at 56.6 after a five- month high of 56.9 in October, the group reported Dec. 1. At the same time, the factory workweek held at 40.3 hours, according to Labor Department figures. Fed Action Fed policy makers are concerned economic growth is not strong enough to reduce unemployment, which climbed to a seven- month high of 9.8 percent in November. The central bank’s Federal Open Market Committee yesterday repeated its pledge to leave the benchmark interest rate low for an “extended period” and retained a $600 billion bond-purchase program through June. Rising international demand and the need to replace aging equipment is a boon to manufacturers. Exports rose to a two-year high in October, Commerce Department figures showed Dec. 10. Business spending on equipment and software advanced at a 17 percent annual rate in the third quarter. The need for truckers to replace aging vehicles and equipment has brought improvements at Wabash National Corp. The Lafayette, Indiana-based maker of semi-truck trailers has “nearly doubled” its workforce this year, adding over 1,200 associates, chief executive officer Richard Giromini said in a Bloomberg Television interview Dec. 13. “The industry has improved dramatically, demand has increased and our customers are now feeling much more comfortable placing orders to replace their aged equipment going forward,” Giromini said. “It’s clear the economy is in recovery.” To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net. To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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