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Business Title: Industrial Production Rises on Autos, Machinery Production at U.S. factories increased in January, reflecting gains in demand for automobiles and business equipment that may keep manufacturing at the forefront of the expansion. Output (IPMGCHNG) at factories rose 0.7 percent after a revised 1.5 percent gain in December that was the largest in five years, figures from the Federal Reserve showed today in Washington. A 2.5 percent decline in utility output prompted by the fourth- warmest January on record caused total industrial output to be little changed, less than forecast. Business investment in new equipment and the need to rebuild inventories will probably keep factory assembly lines rolling at the start in 2012. Nonetheless, Europe’s financial crisis and slowing growth in emerging economies like China threaten to temper orders for U.S. goods. “Manufacturing is doing pretty well,” said Tom Simons, an economist at Jefferies & Co. Inc. in New York. “It will continue to play a driving role in the economy. Global demand is holding up pretty well, we’re still rebuilding inventories and autos remain a significant leader in the factory recovery.” Stocks rose after China said it will get more involved in trying to find a solution for Europe’s sovereign debt crisis. The Standard & Poor’s 500 Index rose 0.3 percent to 1,354.58 at 9:35 a.m. in New York. The median forecast of 81 economists surveyed by Bloomberg News projected total production would rise 0.7 percent. Estimates ranged from gains of 0.1 percent to 1.2 percent. The back-to-back increases in factory output were the biggest since July and August of 2009. Capacity utilization, which measures the amount of a plant in use, fell to 78.5 percent last month from 78.6 percent in December, which was the highest since July 2008, today’s Fed report showed. Manufacturing in the New York region expanded in February at the fastest pace since June 2010, another report showed today. The Fed Bank of New York’s general economic index increased to 19.5 this month from 13.5 in January. The index exceeded all forecasts in a Bloomberg News survey. Readings greater than zero signal expansion in the so-called Empire State Index, which covers New York, northern New Jersey, and southern Connecticut. Manufacturing accounts for about 12 percent of the U.S. economy. The Fed’s national report for January showed output of motor vehicles and parts jumped 6.8 percent, today’s figures show. Manufacturing excluding autos and parts climbed 0.3 percent following a 1.3 percent December increase. Production of business equipment increased 1.8 percent, boosted by more output of computers and transportation gear. Purchases (SAARTOTL) of cars and light trucks climbed to an annualized rate of 14.1 million last month, the highest since the so-called cash-for-clunkers program in August 2009 and the second- strongest since May 2008, according to Autodata Corp. Sales averaged 16.4 million in the two years before the last recession began in December 2007. With the average age of cars and trucks rising to a record 10.8 years, analysts see pent-up demand boosting U.S. sales to a third-straight annual gain in 2012, the longest streak since sales peaked in 2000. Ford Motor Co. (F), the second-largest U.S. automaker, reported its 11th consecutive profitable quarter as sales rose and it boosted North American production by 14 percent. The Dearborn, Michigan-based company U.S. sales rose 11 percent last year. Ford sees its European market worsening while Asia-Pacific will remain solid. Manufacturers and exporters of heavy equipment such as Caterpillar Inc. continue to see growth. Caterpillar, the largest construction and mining-equipment maker, last month posted fourth-quarter earnings and forecast full-year profit that topped analysts’ estimates as demand rose for earth-moving machinery and trucks. The Peoria, Illinois-based manufacturer said it had a record $29.8 billion backlog of orders at the end of 2011. “For many products demand has been above our ability to produce,” Caterpillar spokesman Michael DeWalt told a conference call on Jan. 26. “We have invested in Caterpillar factories in the United States and around the world to increase production.” Total industrial output last month was tempered by the drop in utility use because January was relatively mild. The National Oceanic and Atmospheric Administration reported the average temperature was 36.3 degrees Fahrenheit, 5.5 degrees above the 1901-2000 long-term average. A 1.8 percent drop in mining, which includes oil drilling, also hindered total industrial output.
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