Factory Output Up 0.6%, Biggest Jump in 3 Months

Output at the nation’s factories, mines and utilities shot up 0.6% in October, the biggest increase in three months, the government reported today.

The report by the Federal Reserve Board showed that in the month the financial world was being pounded by the stock market collapse, industrial production was rising at a robust rate. More than half the increase was in auto production.

The 0.6% overall increase followed no change in September and a 0.3% August advance. Production had shot up 1.2% in July.

At the White House, spokesman Marlin Fitzwater commented, “This steady increase in industrial production bodes well for the underlying strength of the economy and for future growth.”

The September advance pushed production 5.1% higher than a year ago as American manufacturers continued to expand output to meet demand from higher export sales.

In a separate report, the Commerce Department said that overall business sales climbed a healthy 1% in September following a 1.1% August advance. The rise in sales was accompanied by a 0.6% increase in total business inventories.

While the sales boost was impressive, economists are likely to be concerned about the sharp jump in inventory levels, especially with fears that consumer spending will taper off in coming months as Americans, jittery about their economic future, cut back on spending to build up savings.

The report on industrial production said auto assemblies, which had fallen in August and September to annual rates of around 6 million units, rose to a rate of 7.3 million units in October. In addition, production of both light- and heavy-weight trucks increased sharply in October.