BLBG: U.S. Industrial Output Probably Rose on Rebound From Hurricanes
By Timothy R. Homan
Nov. 17 (Bloomberg) -- U.S. industrial production probably rose in October as work at Gulf Coast refineries rebounded from shutdowns following Hurricanes Gustav and Ike, economists said ahead of a government report today.
Output grew 0.2 percent after dropping 2.8 percent in September, according to the median estimate of 64 economists surveyed by Bloomberg News. A separate report is likely to show manufacturing in New York contracted this month by the most since records were first compiled in 2001.
The storm-related gains in mining probably offset a decline in manufacturing as slumping sales caused automakers to cut back, economists said. The deepening credit crisis, coupled with weakening demand, is forcing companies to trim purchases of new equipment, intensifying the economic slump.
``Underlying fundamentals suggest continued weakness for the rest of the manufacturing sector given the declines in auto production,'' said Neal Soss, chief economist at Credit Suisse Holdings USA Inc. in New York.
The Federal Reserve will release industrial production figures at 9:15 a.m. in Washington. Survey estimates ranged from a drop of 1 percent to a gain of 1.7 percent. September's decrease was the biggest in almost 34 years.
Capacity utilization, or the proportion of plants in use, likely remained little changed at 76.5 percent from 76.4 percent in September, according to the survey median.
Economists track plant operating rates to gauge factories' ability to produce goods with existing resources. Lower rates reduce the risk of bottlenecks that can push up prices. The utilization rate has averaged about 80 percent over the past three decades.
Regional Slumps
At 8:30 a.m., a report from the New York Fed will show its Empire State index in November dropped to minus 26, the lowest level since record keeping began in 2001, according to the survey median.
Factories may slow production as sales at U.S. retailers drop further. Purchases fell 2.8 percent in October, the most on record and the fourth straight decline, the Commerce Department said last week.
Automakers are at the epicenter of the drop in manufacturing. Industry figures earlier this month showed cars and light trucks sold at a 10.6 million annual pace in October, the lowest since April 1991. President-elect Barack Obama and fellow Democrats in Congress are pushing for a rescue plan worth as much as $50 billion for cash-starved U.S. automakers.
A now-resolved eight-week strike by approximately 27,000 machinists at Boeing Co., the world's second-largest commercial planemaker, probably also hurt factory output last month.
Other reports have already signaled the manufacturing slump deepened. The Institute for Supply Management's factory index for October dropped to the lowest level in 26 years, the Tempe, Arizona-based group said Nov. 3.
Slowing demand in the U.S. and abroad is causing some companies to trim payrolls. U.S. Steel Corp., the largest U.S.- based steelmaker by 2007 sales, will cut 500 American jobs amid a ``dramatic downturn'' in the economy, John Armstrong, a spokesman, said in a telephone interview Nov. 13.
