Industrial Production Up 0.5% in December

U.S. industrial production rose a solid 0.5% in December, the third consecutive monthly improvement, while the operating rate at the nation’s factories, mines and utilities climbed to the highest level since February, the government said Friday.

The dual reports on industrial production and utilization of capacity provided new evidence, economists said, that the nation’s beleaguered manufacturing sector is staging a rebound.

The Federal Reserve Board said the December gain in industrial production followed an even better 0.6% November increase and a 0.3% October rise.

A companion report said the nation’s industry operated at 79.6% of capacity in December, up from 79.4% in November and a 0.6 percentage point improvement since September. It was the highest operating rate since February, when the nation’s factories, mines and utilities were operating at 80.2% of capacity.

For the past three months, industrial production has been rising at an annual rate of 3.25%, sharply ahead of the advance for the entire year of just 0.9%.

The weakness in 1986 came from a big drop in oil and gas well production and continued troubles in American manufacturing, where foreign competition has deprived domestic producers of sales.

“I think we are seeing a turnaround in a previously devastated sector (manufacturing) and it should continue to improve in 1987,” said David Jones, an economist with Aubrey G. Lanston & Co., a government securities dealer.

Jerry Jasinowski, chief economist for the National Assn. of Manufacturers, said that certain industries, particularly chemicals and paper, are already beginning to benefit from a lower dollar, which has helped boost their export sales. He predicted that this will spread to other manufacturing areas but that such advances will be a slow process.