Mining, Oil Drilling Push Factory Activity to 83.9%

The operating rate for U.S. factories rose in April to 83.9%, the first advance in four months, pushed by increased activity in mining and oil drilling, the government said today.

The Federal Reserve Board said the April operating rate was 0.2 points higher than March’s 83.7% and matched the February level. It was the first increase in the rate since it hit a 10-year high of 84.3% in December.

Today’s report was still seen as a sign of an economic slowdown, however, because the central bank lowered previous estimates of the operating rate from January through March.

Economists had worried that the steady upward march of operating rates last year signaled increased inflationary pressures. The closer U.S. industry operates to full capacity, the greater difficulty it has producing enough to meet demand, leading to shortages and price increases.

For the last year, the Fed has been trying to cool those pressures by pushing up interest rates.

In a second report today, the Federal Reserve said the pace of industrial production rose 0.4% in April, after holding steady in March and falling 0.3% in February, the first decline in a year.

At manufacturing plants, the operating rate rose a slight 0.1 point to 84%.

Analysts generally consider an operating rate of 85% to indicate inflationary pressures.

The rate at factories producing durable goods, “big ticket” items expected to last three or more years, rose from 82.4% to 82.6% in April, reflecting increases at auto plants, aerospace manufacturers and both electrical and non-electrical machinery.