Minus Job Creation, U.S. Economic Data Brightens

By John S. McClenahen With the notable and continued exception of job generation, the U.S. recovery is looking even better. Despite a small decline in the production of motor vehicles and parts, U.S. manufacturing output rose 0.9% in November, its best showing since a 0.8% increase in September, the Federal Reserve Board reported on Dec. 16. Capacity utilization in manufacturing last month advanced six-tenths of a percentage point to 74.3%. Overall U.S. industrial production -- which includes mining and utilities in addition to manufacturing -- also increased 0.9% in November, its largest month-to-month gain since October 1999. Capacity utilization across U.S. industry increased sixth-tenths of a percentage point to 75.7%. Meanwhile, U.S. Labor Department's closely watched Consumer Price Index, one of four basic measures of inflation, fell 0.2% in November, contrary to economists' expectations. Prices for energy, transportation, apparel and housing declined last month. The so-called core-CPI -- which excludes often-volatile price changes for food and fuel -- declined 0.1%, also contrary to economists' expectations. Forecasters generally expected both the CPI and core-CPI to increase 0.1% in November. "A retreat in the core-CPI to a new [year-on-year] low of 1.1% should reassure the Fed that it can continue to coast," advises UBS Investment Research, New York. The U.S. Commerce Department reported on Dec. 16 that the deficit in the current account, the broadest measure of the U.S. international economic position, decreased to $135 billion in the July-September quarter of this year. The third-quarter figure was $4.4 billion less than the revised second-quarter figure of $139.4 billion. Part of the decrease in the deficit came from an increase in U.S. exports of capital goods and consumer goods. And housing starts last month far exceeded the 1.91 million annual rate economists generally expected. Starts for privately owned housing in November were at a seasonally adjusted annual rate of 2.07 million, 4.5% above the revised October estimate of 1.98 million, according to data jointly released Dec. 16 by the U.S. Commerce Department and the U.S. Department of Housing and Urban Development. Starts of single-family homes in November were at an annual rate of 1.695 million, 3.3% higher than October's revised rate of 1.641 million. Starts for units in multifamily buildings in November were at an annual rate of 335,000, up from October's 315,000 rate.

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