Industrial Production Rose 0.7 Percent in October

U.S. industrial production rose 0.7 percent in October, boosted by oil drilling and increased auto, aerospace and electrical manufacturing, Federal Reserve data show.

Factory production, which makes up 75 percent of industrial output, increased 0.5 percent, a sign that manufacturing continues to support gradual economic growth. Manufacturers are benefiting from rising exports and domestic sales, and could benefit from the need to replenish tight inventories in the coming months.

The 0.7 percent increase in overall production followed revised 0.1 percent drop in September. Factory production rose 0.3 percent in September.

Daniel J. Meckstroth, chief economist at the Manufacturers Alliance/MAPI, said automakers are benefiting from pent-up demand and aerospace firms and other industries are seeing strong growth in emerging economies and domestic investment in capital equipment.

A worrisome aspect of the report, he said, “is that industries tied to the housing market are still struggling. The unwinding of the negative effects of the housing debacle is, unfortunately, taking a long time and continues to have a limiting effect on the manufacturing recovery.”

October’s gains were led by increases of 3.1 percent in motor vehicle production, following a 0.4 percent rise in September. Excluding autos and parts, manufacturing rose 0.3 percent.

Mining production increased 2.3 percent, the biggest gain since January 2010. Utility output decreased 0.1 percent after dropping 2 percent in September.

Capacity utilization increased to 77.8 percent, the highest since July 2008, from a downwardly revised 77.3 percent in September. The reading compares with the 79.5 percent average over the past 20 years.

-- Contact Joseph Bonney at jbonney@joc.com. Follow him on Twitter @josephbonney.