Ahead of the Bell: Industrial production

AP News
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Posted: Nov 17, 2009 6:35 AM

Industrial production probably rose in October for the fourth straight month amid the early stages of a broad economic recovery.

The Federal Reserve is expected to report that production at the nation's factories, mines and utilities rose 0.4 percent last month, according to economists surveyed by Thomson Reuters. That would follow gains of 0.9 percent in July, 1.2 percent in August and 0.7 percent in September

The report is due out Tuesday at 9:15 a.m. EST.

A rebound in auto production, driven largely by the government's now defunct Cash for Clunkers program, has helped to boost overall industrial production. The program gave people up to $4,500 to buy a new car and trade in old gas guzzlers.

Still, many economists are hopeful that industrial production will continue to chalk up increases in the months ahead _ albeit probably at a slow pace _ as the recovery solidifies.

Faced with rock-bottom inventories of goods, businesses at some point will need to replenish them, one of the forces expected to help boost production in the coming months.

Even the smallest increase in customer demand would probably force factories to bump up output because businesses' stockpiles are razor thin, analysts say.

After four straight losing quarters, the economy returned to growth in the summer at a pace of 3.5 percent from July through September. Economists believe growth probably slowed a bit in the current quarter.

The economy likely will continue to lose speed in the first quarter of next year, as the bracing impact of President Barack Obama's $787 billion stimulus package fades.

Federal Reserve Chairman Ben Bernanke on Monday said he expects the economy to keep growing into next year, although the pace won't be strong enough to quickly bring down the unemployment rate.

The jobless rate _ now at 10.2 percent _ could rise as high as 11 percent by the middle of next year before starting to drift slowly downward, economists say.