Newspaper article THE JOURNAL RECORD

Factory Output Shows Decline in October

Newspaper article THE JOURNAL RECORD

Factory Output Shows Decline in October

Article excerpt

WASHINGTON (AP) -- The output of the nation's factories fell in October for the first time in seven months as autoworker strikes slowed production while some businesses were trimming inventories.

The Federal Reserve said Friday the ripple effect of the strike at General Motors' Canadian plants and later disputes that closed some of GM's U.S. assembly lines was largely responsible for the overall 0.5 percent decline.

But the report also showed that excluding auto plants, output at the nation's factories, mines and utilities was down 0.2 percent, with most industries sharing in the loss. "Producers are responding to the pickup in inventories last summer" when consumer spending waned, explained economist Mark M. Zandi of Regional Financial Associates in West Chester, Pa. By matching inventories with sales, businesses are setting the stage for increased production as demand strengthens, he added."It suggests the economy will continue to expand moderately next year." A separate Commerce Department report Friday showed growth in business inventories slowed to just 0.1 percent in September, from 0.3 percent in August and 0.5 percent in July. At the same time, sales picked up 0.8 percent in September after slipping 0.2 percent the previous month. Many analysts believe sales will continue to grow moderately as the Christmas shopping season approaches. The Fed report contained no sign of inflation, saying the nation's industries were operating at 82.7 percent of capacity, down from 83.4 percent in September. Analysts say a capacity utilization rate of more than 85 percent would threaten productions bottlenecks that could lead to shortages and higher prices. Stocks rose on the reports, which were seen as keeping inflation at bay. By 1 p.m., the Dow Jones industrial average had soared 63. …

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