Rising factory output gives economy a lift

WASHINGTON (AP) — U.S. factories are roaring back from the depths of the recession, cranking out more machinery, vehicles and energy.

Factory production has surged 15 percent above its lows of 21⁄2 years ago and is helping drive the economy’s recovery.

A jump in manufacturing output last month coincided with other data suggesting that the economy began 2012 with renewed vigor. Wholesale prices are tame. Demand for U.S. Treasury debt should help keep borrowing costs low. Even homebuilders are more optimistic.

Manufacturing rose 0.9 percent from November to December, the Federal Reserve said Wednesday. It was the biggest monthly gain since December 2010.

Overall output at the nation’s factories, mines and utilities grew 0.4 percent. Warm weather dampened demand for energy produced by utilities.

Over the past year, factory output has risen 3.7 percent. Factories benefited in particular in the second half of 2011 from several trends: People bought more cars. Businesses spent more on industrial machinery and computers before a tax incentive expired. And companies restocked their supplies after cutting them last summer.

The growth has also fueled more hiring. Factories added 23,000 jobs in December, the most since July. That helped reduce the unemployment rate to 8.5 percent, the lowest level in nearly three years.

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