WASHINGTON—U.S. factory production, home building and the job market showed signs of a pickup in November, offering additional signals that the U.S. economy is firming.
Factory production rebounded strongly as auto-industry output picked up after the
General Motors Co.
strike ended, the Federal Reserve said Tuesday. Industrial production, a measure of factory, mining and utility output, increased a seasonally adjusted 1.1% in November from the prior month.
That marked the biggest month-over-month increase since October 2017. Excluding motor vehicles and parts, industrial production increased 0.5% last month and the manufacturing index rose 0.3%.
“Against a backdrop of slightly brighter global conditions, easing trade tensions easing and a stable dollar, the prospects for the industrial sector look set to brighten a touch in 2020,” Capital Economics economist
said in a Tuesday client note.
The jump in November output followed recent weak readings and came after the United Auto Workers union ended its nationwide 40-day strike at General Motors factories in late October.
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A separate reading on the U.S. housing sector showed construction of new homes climbed in November, a sign of continued momentum in the housing sector. The Commerce Department on Tuesday said housing starts, a measure of U.S. home-building, increased 3.2% in November from October to a seasonally adjusted annual rate of 1.365 million. Residential permits, which can be a bellwether for future home construction, also rose 1.4% from the previous month to a seasonally adjusted annual rate of 1.482 million.
The housing sector has strengthened this year following a slump that began in late 2018. The National Association of Homebuilders reported Monday that a gauge of home-builder confidence hit its highest level in 20 years this month. The National Association of Realtors will release data Thursday on November sales of previously owned homes, which economists expect softened slightly from October.
The latest jobs data shows the labor market remains tight, consistent with unemployment at a half-century low and steady raises for workers.
Job openings at U.S. employers increased by 235,000 to 7.27 million at the end of October, the Labor Department said Tuesday. The level of openings is down from a year earlier but still historically high, showing solid demand for workers despite a cooler pace of hiring in 2019 versus 2018.
“Labor demand is still slowing down, but the strong labor market persists,” said
economist at job-search site Indeed.com.
The number of available jobs exceeded the number of unemployed Americans, those without jobs but actively seeking work, by 1.4 million in October. Before early 2018, that had never occured in nearly two decades of records.
While the housing sector and the labor market have supported broader growth this year, the longer-term manufacturing trend remains weak: From a year earlier, industrial production declined 0.8% in November.
“Despite the GM-induced gyrations in recent months, the story for the factory sector remains one of mild contraction in 2019, hampered by trade tensions and a strong dollar,” said
chief economist at Amherst Pierpont, in a note to clients.
Manufacturing output, which accounts for about 75% of the nation’s total industrial output, increased 1.1% in November, the most since February 2018. That followed a 0.7% drop in both September and October.
Mining production fell 0.2% last month, while utilities output increased 2.9%. The mining index, which includes oil-and-natural-gas extraction, was up 2% from a year earlier.
Capacity utilization, which reflects how much industries are producing compared with what they could potentially produce, increased by 0.7 percentage point to 77.3% in November. Economists had expected 77.4%.
Tuesday’s data is the latest to indicate the U.S. manufacturing sector is beginning to stabilize after a tumultuous year marked by trade uncertainty.
In addition to trade developments, oil prices are up about 30% from a year earlier, a trend that could halt further contraction in energy-related manufacturing. Auto makers also have labor agreements in place, and the global economic slowdown doesn’t appear to be as severe as some feared.
Write to Harriet Torry at [email protected]
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