Published December 14, 2012
Reuters
A separate report on Friday bolstered the view that a slowdown in manufacturing may have run its course. Factories have bounced back after being held down by Superstorm Sandy, which struck the East Coast in late October.
Despite last month's rise, factory production remained below highs reached earlier this year. Analysts said this subdued recovery and tame price pressures provide ample scope for the Federal Reserve to stay on its ultra-easy monetary policy path.
"This is an economy that still has a lot of slack and upside potential," said Robert Dye, chief economist at Comerica in Dallas. "There is a lot of dry tinder out there, the Fed has added to that with monetary policy and we have to get past the fiscal cliff issues to see if the dry tinder catches fire."
The fiscal cliff refers to the $600 billion in deep government spending cuts and tax hikes that will hit the economy next year if the Obama administration and Congress fail to agree on a less drastic plan to reduce budget deficits.
Manufacturing output rose 1.1 percent in November, the biggest gain since December 2011 and a rebound from a 1.0 percent drop in the prior month, the Fed said. It said production was lifted by a surge in motor vehicle output.
Sandy had weighed on overall industrial output in October, but the snapback in November was stronger than economists had expected. Output at the nation's factories, mines and utilities taken together also jumped 1.1 percent after slumping 0.7 percent in October. It was the biggest gain in almost two years.
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