Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, November 16, 1994 TAG: 9411160117
SECTION: BUSINESS PAGE: B-7 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
After declining in September for the first time in 17 months, industrial production was back on track last month; it rose 0.7 percent, the government said Tuesday.
The Federal Reserve also said the advance was accompanied by the highest operating rate in nearly 15 years at the nation's mines, factories and utilities.
Led by factories, industries were operating at 84.9 percent of capacity in October - the highest rate since 85.1 percent in February 1980. Analysts say an operating rate of around 85 percent can signal the start of bottlenecks and rising prices.
The Commerce Department reported that retail sales surged 1.1 percent in October, a fifth straight advance, with car and truck buying leading the way.
``These data are telling us we have a strong economy. There was no letup in momentum going into the fourth quarter,'' said economist Carl Palash of MCM Moneywatch, a New York City forecasting firm. ``Consumption started the quarter strong, and the manufacturing sector is still on a solid uptrend.''The Fed's policy-making Federal Open Market Committee, worried that economic growth will lead to higher inflation, raised short-term interest rates for the sixth time this year.
The increase of 0.75 percentage point in the discount rate the Fed charges member banks was the largest since May 1981. The widely anticipated boost came after the October data were announced.
The October gain in industrial production took place despite the fourth straight drop in output at the nation's utilities. Utility production, down 0.7 percent in September, slipped 0.5 percent in October as much of the nation continued to experience unseasonably warm weather.
Overall production declined 0.1 percent in September, the first dip since May 1993. Output rose 0.8 percent in August.
Led by production of business equipment, factory output rose 0.9 percent in October after remaining unchanged the previous month. Mining output slipped 0.2 percent after easing 0.1 percent in September.
The production figures were in line with analysts' predictions. But retail sales, which represent about half of consumer spending, exceeded expectations as they totaled a seasonally adjusted $191.2 billion in October, up from $189 billion.
Sales were up a moderate 0.5 percent in September after soaring 1.4 percent in August and have risen every month since May, when they were unchanged. They are 7.5 percent higher than a year ago.
Sales of cars and light trucks increased 2.9 percent in October after rising 0.6 percent in September and 3 percent in August.
Sales of durable goods - including appliances, autos and other items expected to last more than three years - rose 2.3 percent following a 0.6 percent advance in September.
Excluding autos, all sales were up 0.6 percent last month compared to 0.5 percent in September.
All major durable goods sectors posted gains.
Nondurable goods such as groceries and gasoline were up 0.4 percent on top of a 0.5 percent gain in September.
by CNB