Light Trucks Drive Gains in Manufacturing : Economy: October’s increase of 0.3% in factory output and a steadying of business inventories offer positive signs of recovery.

Industrial production in October perked up after a summer slump, helped by a large gain in light truck manufacturing, the government said Monday.

The Federal Reserve said output at factories, mines and utilities rose a modest 0.3% last month, only the second increase in five months. Output had fallen 0.2% in September and 0.3% in August.

Meanwhile, in another positive sign, the Commerce Department said a worrisome buildup in business inventories halted, or at least paused, in September.

Inventories were unchanged after rising in June, July and August. Business sales jumped 1.3%, reversing an identical decline in August.

The combination of rising sales and unchanged inventories bodes well for future factory production, economists said. But they cautioned against drawing too much optimism from Monday’s reports. The figures indicate industrial growth has improved a bit since the summer but is still far from strong, they said.

“The industrial sector still . . . has to be considered feeble,” said economist Robert G. Dederick of Northern Trust Co. in Chicago. “Gains of this size are not adequate to bring us employment gains in manufacturing. As of October, manufacturers were still throwing people overboard.”

Factories laid off 56,000 workers in October, but the work week and overtime hours for existing employees increased. Eventually, if the economy continues to improve, factories will come under pressure to start rehiring--but the question is when.

“That’s the million-dollar question,” said economist Priscilla Trumbull of the WEFA Group, a forecasting firm in Bala-Cynwyd, Pa. “We’ve been trying to answer it for two years.”

She said manufacturers have been shedding workers in a long-term effort to keep costs down and stay ahead of European and Asian competitors. That’s counterbalanced the normally expected employment gains during a recovery.

“I think the best we can do over the next three to six months is stop the flow of jobs out of manufacturing,” she said.

Some analysts were disappointed that much of the October rise in production seemed concentrated in light trucks, which were assembled at an annual rate of 4.4 million units, up from 3.8 million the month before. Automobiles were assembled at a 5.5 million annual rate, the same as September.

Excluding autos and trucks, overall industrial production rose just 0.1%.

However, economist Paul W. Boltz of T. Rowe Price Associates in Baltimore said increasing light truck sales shouldn’t be discounted as a positive sign for consumer confidence and the economy in general.

“Light truck sales are changing the complexion of the auto industry in a very profound way,” he said. “Many of these light trucks now are viewed by consumers as interchangeable with automobiles.”

Manufacturing in October rose 0.3%. A 0.5% decline in utilities output offset a 0.5% increase in mining, which includes oil and gas production.

The mining increase primarily reflected greater production at natural gas platforms in the Gulf of Mexico, where Hurricane Andrew had disrupted output.