Factory output gain signals sustained US demand

Production at US factories picked up in October, indicating the government shutdown did little to impede manufacturing at the start of the fourth quarter.

The 0.3 per cent advance followed a 0.1 per cent gain the prior month and exceeded the 0.2 per cent median projection in a Bloomberg survey, figures from the Federal Reserve showed today in Washington. Total industrial production fell 0.1 per cent as mining and utility use declined.

Increased output of furniture, metals and electronics shows gains in manufacturing are extending beyond the auto industry, underscoring recent reports of improving sentiment at factories. Busier assembly lines are a source of strength for an economy that was restrained by a decrease in government spending tied to the 16-day partial federal shutdown.

"It's a good start to the quarter," said Brian Jones, senior US economist at Societe Generale in New York, who correctly projected the drop in total output. Production gains are "becoming broad-based. Are we going at rocket speed? No, but things are generally getting better in the economy."

Another report showed a gauge of manufacturing in the New York region unexpectedly declined this month. The Federal Reserve Bank of New York's general economic index fell to minus 2.2 in November from 1.5 the prior month.