U.S. industrial production fell in November for the first time in seven months. Factories made fewer cars, electronics and appliances.
The Federal Reserve says that output at the nation's factories, utilities and mines dropped 0.2 percent last month.
Factory output, the biggest component of industrial production, decreased 0.4 percent, mainly because of steep decline in the production of motor vehicles and parts. Production of home electronics, business equipment and supplies and apparel also fell.
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Without the volatile automotive category, factory output decreased 0.2 percent last month.
The decline in industrial production was the first since April. Still, manufacturing can be volatile from month to month. And a separate regional survey from the Fed showed that factory growth in the Northeast expanded in December at the fastest rate since May.
Manufacturing was an early bright spot in the economic recovery, helping the nation emerge from the deep recession that ended officially in June 2009. Factories helped lift overall growth in 2009 and 2010.
They showed smaller gains earlier this year because of the disasters in Japan and higher gas prices, which reduced consumers' buying power. The economy barely grew in the first six months of the year.
Factory output appeared to strengthen recently, rising in every month since June as output of autos, auto parts and refined energy products soared. But a shorter factory work week may have slowed manufacturing growth last month, economists say.
The total hours worked by manufacturing workers declined 0.5 percent last month, according to the government's November jobs report.
Smaller profit margins for oil refineries also probably weighed on manufacturing output in November, according to economists with Janney Montgomery Scott. Until October, refined petroleum products fetched high prices compared to unrefined petroleum. Refineries took advantage, boosting production 1.9 percent in October.
That trend likely reversed in November, causing energy production to decrease, Janney economists said in a research note.
Other signals have been more encouraging. A private index of manufacturing activity suggested modest growth in November. The Institute for Supply Management said its manufacturing index rose to 52.7 in November from 50.8 in October. Any reading above 50 indicates expansion. The ISM also said that new orders and production rose to seven-month highs. And export orders increased, despite the turmoil in Europe.
Retail sales increased in November for the sixth straight month, showing that consumers continue to spend despite stagnant wages and high unemployment. Consumer demand drives much of the economy, including a large part of the manufacturing sector.
Businesses also increased their inventories in October. Extra factory production was likely needed to fulfill orders from companies seeking to expand their stockpiles.
And automakers reported strong sales for November, with Chrysler, Ford, Nissan and Hyundai showing double-digit sales gains. Automakers offered steep discounts and many consumers can't wait any longer to replace their aging vehicles. The auto industry's growth has been a major contributor to recent gains in factory output.
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