Industry output increased 0.7% in October; Gain driven by rebound from Hurricane Floyd


WASHINGTON -- U.S. industrial production rose in October at the fastest rate in seven months as utilities and appliance and auto manufacturers bounced back from the effects of Hurricane Floyd, Federal Reserve figures showed yesterday.

Output at factories, utilities and mines increased 0.7 percent last month -- the largest gain since March -- after falling 0.1 percent in September when the hurricane disrupted power plants and many factories along the East Coast.

The increase demonstrates that the economy can grow with little pressure on prices, analysts said. "Managers of manufacturing companies keep producing more and more with fewer and fewer folks," said David Orr, chief economist at First Union Corp. in Charlotte. "That's productivity in a nutshell."

October's production increase was the 10th in the last 11 months and more than twice the 0.3 percent gain analysts expected. The report also showed that the plant-use rate, which measures industrial capacity in use, rose to 80.7 percent -- the highest since December -- from 80.4 percent in September.

The economy expanded in the third quarter at the fastest pace in a year, as exports picked up steam. Unemployment fell to a 29-year low of 4.1 percent last month as the supply of available workers shrank.

Utility output increased 2 percent last month after falling 2.5 percent a month earlier. Without the gain in utilities, production still rose 0.6 percent after a 0.1 percent increase in September.

October's 0.6 percent rise in manufacturing production was paced by a rebound in auto production; it rose 1.7 percent after a 3.7 percent drop in September. Home appliance output rose 8.3 percent last month, more than reversing a 6.9 percent decline a month earlier.

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