Washington, DC, Feb. 14--Industrial production made a comeback in January, rising 0.7% from the month before, while businesses boosted inventories the month before--a pair of promising signs for the struggling economy.
The 0.7% increase in industrial activity marked a turnaround from the 0.4% drop registered in December, and was the largest jump since July’s 0.7% increase, according to the Federal Reserve. The strong showing surprised economists, who were predicting a 0.3% advance.
The industrial sector has been the economy’s weakest, but the report offered some hope for the battered sector.
December's increase in business inventories was the largest in three months, although retail sales during the holidays fell short of expectations.
The supply increase was two times bigger than the 0.3% rise recorded in November, according to the Commerce Department. Business sales edged up 0.2% in December, slightly more than the 0.1% rise registered the month before.
At factories, which account for most industrial output tracked by the Fed, production rose 0.5% in January, largely reflecting a boost in automobile production. That marked a big improvement over the 0.4% drop in factory output registered in December.
Production at gas and electric utilities jumped 4% last month, compared with a 1.4% drop in December, as demand was stoked by colder weather.
At mines, however, production fell 1.2%, more than reversing a 1% gain posted in December.
The economy has been coping with uneven growth as a quarter of strength has been followed by one of weakness. And businesses have been struggling, especially, to try and gauge demand for their goods during these muddled economic times.
The biggest factor holding back the economy's recovery: businesses have been reluctant to make big commitments in hiring and in capital spending, due in part to uneasiness about the possibility of war and also generally to an uncertain business environment.
The 0.6% increase in inventories was stronger than the 0.2% rise economists were predicting and represented the biggest boost since September.
Even though December's increase marked the eighth straight month that businesses have added to their stockpiles, economists say that the levels are still lean, reflecting companies' wariness about the economic climate.
In the inventories report, retailers boosted supplies by 0.6% in December and sales rose 2%.
Factories saw their stockpiles rise 0.5% in December as sales slid 0.6%. At wholesalers, supplies rose 0.8% as sales fell by the same amount.
