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Factory output rises, helping economic recovery gain steam

Published Jan. 19, 2012

WASHINGTON — U.S. factories are roaring back from the depths of the recession, cranking out more machinery, vehicles and energy.

Manufacturing rose 0.9 percent from November to December, the Federal Reserve said Wednesday. It was the biggest gain since December 2010.

Overall output at the nation's factories, mines and utilities grew 0.4 percent. Warm weather dampened demand for energy produced by utilities.

Factory production has surged 15 percent above its lows of 21/2 years ago and is helping drive the economy's recovery.

Signs "that manufacturing in the U.S. is gaining global market share appears to be growing, and this could be an important dynamic supporting growth in 2012," said John Ryding of RDQ Economics.

Over the past year, factory output has risen 3.7 percent. Factories benefited in particular in the second half of 2011 from several trends: People bought more cars. Businesses spent more on industrial machinery and computers before a tax incentive expired. And companies restocked their supplies after cutting them last summer.

And high prices for oil, copper and other metals should boost growth in mining and drilling. That would lead to greater demand for drill pipes, large trucks used in mining and other gear, in the United States and overseas.

Last year's growth has also fueled more hiring. Factories added 23,000 jobs in December, the most since July. That helped reduce the unemployment rate to 8.5 percent, the lowest level in nearly three years.

December's gains suggest the industry "is still resistant to the apparent slowdown in growth elsewhere, particularly in Europe," said Paul Ashworth, chief U.S. economist with Capital Economics.