Output at the nation's factories, mines and utilities shot up 0.9 percent in November, the sixth straight gain and the largest in a year, the government said Wednesday. It was the latest evidence the economy continues to strengthen.
The Federal Reserve said the increase in industrial production was led by car and truck manufacturing and came on top of a revised 0.7 jump in October, which initially was estimated to be 0.8 percent.It was the biggest jump since a 0.9 percent advance in November 1992. Many analysts had expected only a 0.6 percent gain.
"The growth in recent months has been led by sharp increases in the motor vehicles and parts industry, where the level of production rose 20 percent between August and November," the report said.
"Excluding motor vehicles and parts, industrial production grew 0.5 percent in November, with solid gains in the output of construction supplies and information processing equipment," it said.
The growth in output was accompanied by a rise in the operating rate at industries, which if it continues could increase inflation worries.
The rate rose to 83 percent of capacity in November, highest since August 1989, when it registered 83.2 percent. Many economists contend that a rate higher than 85 percent could result in production bottlenecks and then rising prices as output fails to meet demand.
In a second report, the Commerce Department said business inventories were unchanged in October, the first time in three months they failed to increase. Sales, on the other hand, rose 0.4 percent, the sixth advance in seven months.
The combination resulted in an inventory-to-sales ratio of 1.45 in October, down from 1.46 a month earlier. The ratio means it would take 1.45 months to deplete stockpiles at the October sales pace.
The ratio was the lowest since 1982, when current inventory accounting methods were put in force. Analysts say the lean inventory level could result in increased orders, leading to rising production and employment.
Factory output jumped 1 percent in November, up from 0.7 percent a month earlier. Manufacturing represents about 85 percent of industrial production.
Production of durable goods - big-ticket items expected to last more than three years such as cars and computers - continued to surge, up 1.3 percent. It had risen 1.1 percent in October and 1 percent in September.
Production of non-durable goods such as textiles and paper increased 0.6 percent following a 0.2 percent gain the previous month.
Production at utilities advanced 0.3 percent after rising 0.2 percent in October.
But mining output, which includes oil drilling, slipped 0.3 percent, down from a 0.5 percent increase a month earlier.
The various changes in production left the Fed's index of industrial production at a record 113.2 percent of its 1987 base, up 4.4 percent from a year ago.