Good News for U.S. Production and Automotive Industry

BY andrewb ON February 15, 2012.

Production at U.S. factories increased in January, reflecting gains in demand for automobiles and business equipment that may keep manufacturing at the forefront of the expansion.

Business investment in new equipment and the need to rebuild inventories will probably keep factory assembly lines rolling at the start in 2012. Nonetheless, Europe’s financial crisis and slowing growth in emerging economies like China threaten to temper orders for U.S. goods.

“Manufacturing is doing pretty well,” said Tom Simons, an economist at Jefferies & Co. Inc. in New York. “It will continue to play a driving role in the economy. Global demand is holding up pretty well, we’re still rebuilding inventories and autos remain a significant leader in the factory recovery.”

Stocks rose after China said it will get more involved in trying to find a solution for Europe’s sovereign debt crisis.

Auto Production

Manufacturing accounts for about 12 percent of the U.S. economy.

The Fed’s national report for January showed output of motor vehicles and parts jumped 6.8 percent, today’s figures show. Manufacturing excluding autos and parts climbed 0.3 percent following a 1.3 percent December increase.

Purchases of cars and light trucks climbed to an annualized rate of 14.1 million last month, the highest since the so-called cash-for-clunkers program in August 2009 and the second- strongest since May 2008, according to Autodata Corp. Sales averaged 16.4 million in the two years before the last recession began in December 2007.

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