Industrial production rose 0.8 percent last month, the strongest gain since August, according to the Federal Reserve this week. Still, industrial output has fallen 5.1 percent over the past year.

Since a small percentage point drop in June, the nation’s mines, factories and utilities have made small but steady gains, except for a flat October. In the third quarter of the year, United States industrial output posted the first quarterly gain since early 2008 and the largest single-quarter gain since Q1 2005, improving hopes that the current production upswing may be a permanent one.

Industrial output continues its positive trajectory, as growth in U.S. industrial production last month posted its strongest gain since August, according to the Federal Reserve on Tuesday.

Overall, industrial production rose a better-than-expected 0.8 percent in November, the fifth consecutive month without a negative change, according to the Fed’s report on industrial production and capacity utilization yesterday.

“The gain shows that businesses and consumers are spending more, clearing inventories and spurring factories to produce more goods,” the Associated Press said.

Capacity utilization, which measures how much of the nation’s production capability is in use, rose to 71.3 percent in November from a 70.6 percent rate in October. Although a welcome increase, the latest capacity utilization rate remains 9.6 percentage points below the historical average of 80.9.

“The strong gain in November’s industrial activity has to be put in context of the flattening out in October,” Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI, said in an analysis of yesterday’s report. “Averaged over two months, the industrial gain is moderately strong but has much room to improve given that the factory utilization rate is only 68.4 percent when the long term average manufacturing utilization rate is 79.6 percent.”

The manufacturing sector — which the AP called “the biggest slice of industrial output” — reversed a one-month decline and expanded by 1.1 percent in November. Broad-based advances were made in both durables (1 percent) and nondurables (1.1 percent), led by gains in automobiles, appliances, home furnishings and consumer goods.

Meanwhile, mining output jumped 2.1 percent. The index for utilities, however, fell 1.8 percent, primarily due to mild November temperatures that reduced demand for heating.

The overall rise in production exceeded expectations, as economists had been anticipating November growth of 0.5 percent. (Source: MarketWatch)

“Positive momentum is building, but at this point a broad-based economic recovery has yet to materialize for American industries,” Dave Huether, chief economist for the National Association of Manufacturers, told the New York Times. “The recovery is still fragile and in the beginning stages.”

At 99.4 percent of its 2002 average, total industrial production was 5.1 percent below its level of a year earlier.

Although Meckstroth expects continued moderate growth in industrial activity in 2010, he told the Times that it would probably take three years before the manufacturing sector returned to its pre-recession levels.

A separate index on manufacturing in the New York State region indicated that conditions for New York manufacturers leveled off in December, following four months of improvement.

Both reports, released Tuesday, coincided with the start of a two-day meeting of Federal Reserve officials to review interest rates and monetary policy.

Earlier

Despite Optimistic Indicators, Industry Remains Weak

Industrial Production Slows in October

Industrial Output Makes Largest Quarterly Gain in 4 Years

Resources

Industrial Production and Capacity Utilization: November
U.S. Federal Reserve, Dec. 15, 2009

Industrial Output Rises More than Expected in Nov.
by Daniel Wagner
The Associated Press, Dec. 15, 2009

Industrial Production Report ‘Moderately Strong but Room to Improve’
by Daniel J. Meckstroth
Manufacturers Alliance/MAPI, Dec. 15, 2009

Economic Calendar
MarketWatch

Production Gains in U.S. Offer Hope for More Hiring
by Javier C. Hernandez
The New York Times, Dec. 15, 2009

Empire State Manufacturing Survey: December
Federal Reserve Bank of New York, Dec. 15, 2009