Industrial Production Up 0.1% in September

Production at U.S. factories, mines and utilities edged up 0.1% in September, the government said Thursday in a report that left economists divided over whether the two-year slump in manufacturing is drawing to a close or worsening.

The Federal Reserve Board said the small September increase, which matched a 0.1% August gain, left factory output just 0.8% higher than it was a year ago.

U.S. manufacturing has been in a slump for the past two years while the trade deficit has been growing.

Many economists said the weak increase, which came principally from stepped-up production of automobiles, emphasized that U.S. factories have yet to feel any easing of the trade pressures.

“We have had 25 months of stagnation in industrial production,” said Jerry Jasinowski, chief economist of the National Assn. of Manufacturers. “I think the possibility of a recession is higher today than it was two or three months ago because of the weak economic statistics.”

Optimism for 1987

Priscilla Luce, economist with Wharton Econometrics of Philadelphia, said she looks for continued small monthly gains in industrial production for the rest of the year with somewhat better factory output in 1987 as an improving trade deficit helps U.S. manufacturers.

“I think we are seeing a bottoming out of the problems in the manufacturing sector and the beginning of an upward trend. We are not among the crew that is expecting a recession,” she said.

At the White House, presidential spokesman Larry Speakes was even more upbeat, terming the September increase in industrial output “encouraging news.”

In a second report Thursday, the government said total business sales rose 0.4% in August, following a 0.5% July gain, while inventories held by businesses were unchanged after rising 0.5% in July.