WASHINGTON (Reuters) - U.S. industrial production rose by a smaller-than-expected 0.1 percent in October, Federal Reserve data showed on Tuesday, as auto manufacturers scaled back following the end of the “cash for clunkers” incentive.
Economists polled by Reuters had expected a 0.4 percent increase following September’s 0.6 percent advance, which was initially reported as a 0.7 percent rise.
October’s output gain marked the fourth consecutive monthly increase as the economy claws back from the depths of a recession that started in December 2007. It was down 7.1 percent from a year earlier.
Capacity utilization, a measure of slack in the economy, moved up 0.2 percentage point to 70.7 percent, a rate 10.2 points below its 1972-through-2008 average and slightly under economists’ expectations for 70.8 percent.
The Fed is watching resource utilization as one guidepost in deciding when to lift its benchmark interest rate from the current level near zero. The central bank has said it intends to keep rates unusually low for an extended period, provided inflation pressures aren’t building.
The report showed a decline of 1.4 percent in the index of durable consumer goods, which included a 2 percent drop in the output of automotive products. Assemblies of light motor vehicles edged down to an annual rate of 6.8 million units in October, after climbing to a 7.1 million pace in September.
Auto makers got a big lift in August from the “cash for clunkers” program, which provided incentives for buying new cars. They stepped up assemblies in September to replenish depleted inventories.
Reporting by Emily Kaiser, Editing by Chizu Nomiyama
Our Standards: The Thomson Reuters Trust Principles.