- The Washington Times - Wednesday, November 18, 2009

Production from the nation’s factories, mines and utilities increased slightly in October after three months of strong growth, suggesting that the nation’s nascent recovery may be slowing.

Industrial production edged higher by just 0.1 percent in October after jumping an average of nearly 1 percent per month in July, August and September, the Federal Reserve reported Tuesday. Led by a decline in auto production, factory output actually declined 0.1 percent last month after registering average monthly gains of 1.1 percent during the third quarter.

Manufacturing represents the biggest proportion of industrial production. Output from the nation’s mines also declined in October, falling 0.2 percent. But the third-coolest October on record, according to the National Oceanic and Atmospheric Administration, led to a big jump in output from utilities, generating the minuscule 0.1 percent rise in total output.

“The boost to auto production from the ‘cash for clunkers’ rebate program seems to be running out of gas, as motor vehicles and parts production slipped 1.7 percent,” said Tim Quinlan, an economic analyst at Wells Fargo. Manufacturing output unrelated to autos also declined, the report showed. And production of business equipment fell for the second month in a row.

“Still, the fourth straight monthly gain for industrial production suggests overall output is slowly rebounding,” Mr. Quinlan said, even if the pace of expansion ratcheted down last month.

Fed Chairman Ben S. Bernanke acknowledged in a speech on Monday that “important head winds - in particular, constrained bank lending and a weak job market - likely will prevent the expansion from being as robust as we would hope.”

As the economy slowly crawls out of its deepest recession since the Great Depression, additional evidence emerged Tuesday signaling that inflationary pressures remain quite subdued.

The Producer Price Index increased 0.3 percent in October, mostly due to rises in food and energy prices. The core index, which excludes the volatile food and energy sectors, fell 0.6 percent last month, the second-largest percentage drop since records began in 1974.

In the past 12 months, the Producer Price Index, which tracks prices paid to factories, farmers and other producers, has declined 1.9 percent, suggesting there is little pent-up inflationary pressure.

The Treasury Department reported that foreign demand for long-term American financial assets, especially Treasury notes and bonds, increased to $40.7 billion in September from $34.2 billion in August.

China, the largest foreign holder of Treasury debt, increased its stake by $2 billion to $799 billion, while Japan’s holdings jumped by $20 billion to $752 billion. Other holders of U.S. government debt from the Asia-Pacific region, where President Obama is traveling this week, include Hong Kong ($132 billion), Russia ($122 billion), Taiwan ($78 billion), South Korea ($39 billion), Singapore ($38 billion), Thailand ($30 billion) and Malaysia ($11 billion).

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