Newspaper article THE JOURNAL RECORD

Rise in U.S. Factory Production Divides Economists on Estimating Slump

Newspaper article THE JOURNAL RECORD

Rise in U.S. Factory Production Divides Economists on Estimating Slump

Article excerpt

WASHINGTON (AP) - Production at U.S. factories, mines and utilities edged up 0.1 percent in September, the government said Thursday in a report that left economists divided over whether the two-year slump in manufacturing is drawing to a close or worsening.

The Federal Reserve Board said the small September increase, which matched a 0.1 percent August gain, left factory output just 0.8 percent higher than it was a year ago.

U.S. manufacturing has been in a slump for the past two years as a worsening trade deficit has hurt the sales of domestic manufacturers.

Many economists said the weak August increase, which came principally from stepped-up production of automobiles, emphasized that U.S. factories have yet to feel any easing of the trade pressures.

""We have had 25 months of stagnation in industrial production,'' said Jerry Jasinowski, chief economist of the National Association of Manufacturers. ""I think the possibility of a recession is higher today than it was two or three months ago because of the weak economic statistics.''

Jasinowski said the boost in auto production is likely to be reversed once sales slump with the ending of the discount financing incentives. He predicted this will depress production figures early next year, he predicted.

Priscilla Luce, economist with Wharton Econometrics of Philadelphia, said she looked for continued small monthly gains in industrial production for the rest of the year with somewhat better factoryoutput in 1987 as an improving trade deficit helps U.S. manufacturers.

""I think we are seeing a bottoming out of the problems in the manufacturing sector and the beginning of an upward trend. We are not among the crew that is expecting a recession,'' she said.

At the White House, presidential spokesman Larry Speakes was even more upbeat, terming the September increase in industrial output ""encouraging news.''

""The industrial sector is America is growing steadily and can be expected to make even greater advances as the nation's trade deficit declines,'' he said. …

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