Industrial Production in U.S. Probably Rebounded

Industrial production in the U.S. probably rebounded in December, a sign that manufacturing was weathering a global slowdown at the end of last year, economists said before a report today.

Production at factories, mines and utilities increased 0.5 percent after declining 0.2 percent in November, according to the median forecast of 80 economists surveyed by Bloomberg News. Confidence improved among homebuilders this month and wholesale prices were little changed in December, other data may show.

Gains in consumer demand and business investment combined with lean inventories are prompting factories to hire more workers and add hours. Europe’s financial crisis and a weaker euro threaten to restrain purchases of American-made goods, limiting production growth.

“For manufacturing, it’s steady-as-she-goes at a reasonable clip for the near term,” said Richard DeKaser, deputy chief economist at the Parthenon Group Inc. in Boston. “The only thing that’s preventing manufacturing from taking a lead position in the expansion is the recession in Europe, which has hurt U.S. exports.”

The Federal Reserve’s production data are due at 9:15 a.m. in Washington. Economists’ estimates ranged from no change to a 0.8 percent increase.

Manufacturing, which accounts for about 75 percent of industrial production, may keep contributing to the expansion in the world’s largest economy even as a possible recession in Europe weighs on global growth.

‘Challenging Environment’

“2011 proved to be a challenging environment, most notably with the difficulties in the European region,” Roger Wood, president and chief executive officer at Dana Holding Corp. (DAN), said Jan. 10 at an auto industry conference in Detroit. “Looking forward, we continue to foresee a mixed global outlook. We expect slow growth in North America and much better growth in both Asia and South America. We believe that Europe will continue to lag.”

The Maumee, Ohio-based maker of truck axles and frames, said in a statement that adjusted profit this year will be $1.95 to $2.05 a share. The average estimate of 12 analysts surveyed by Bloomberg was $1.88.

U.S. exports dropped to a four-month low in November, depressed by a decline in shipments to Europe, according to Commerce Department figures released last week.

Auto Production

At the same time, automobile production in the U.S. is helping boost factory activity. Munich-based Bayerische Motoren Werke AG (BMW), the world’s largest maker of luxury autos, will invest about $900 million in its South Carolina factory to expand capacity and prepare the facility to produce a new sport-utility vehicle.

The spending, to be completed by 2014, will help increase capacity at the plant in Spartanburg to 350,000 vehicles a year from the 276,100 autos made there last year, the Munich-based company said last week in a statement. BMW will make the new X4 SUV at the factory, adding to the X3, X5 and X6 models already assembled there.

Manufacturers added 23,000 jobs in December, the most in five months, Labor Department figures showed on Jan. 6. Hours by non-supervisory factory workers climbed to 41.5 in December, matching the highest since May 2010 and a sign manufacturers may keeping adding to payrolls.

“Manufacturing activity generally continued to expand, although the pace of growth has slowed for selected subsectors such as technology products,” the Fed said in its Beige Book anecdotal business survey released Jan. 11.

Housing Stabilizing

The housing market, meantime, is projected to show further signs of stabilizing. A 10 a.m. report from the National Association of Home Builders/Wells Fargo may show that its confidence index (S15HOME) rose for a fourth straight month to the highest level since May 2010, according to economists surveyed by Bloomberg.

A gain in third-quarter orders at Lennar Corp., the third- largest U.S. homebuilder by revenue, has helped bolster builder shares. The Standard & Poor’s Supercomposite Homebuilding Index has climbed 15 percent since Nov. 30.

Another report may show that prices paid to U.S. wholesalers climbed at a slower pace in December. The producer- price index increased 0.1 percent, compared with 0.3 percent the previous month, economists said ahead of Labor Department figures due at 8:30 a.m. in Washington.

                         Bloomberg Survey

================================================================
                               PPI     Core     Ind.     Cap.
                                        PPI    Prod.    Util.
                              MOM%     MOM%     MOM%        %
================================================================

Date of Release              01/18    01/18    01/18    01/18
Observation Period            Dec.     Dec.     Dec.     Dec.
----------------------------------------------------------------
Median                        0.1%     0.1%     0.5%    78.1%
Average                       0.1%     0.1%     0.4%    78.1%
High Forecast                 0.8%     0.3%     0.8%    78.4%
Low Forecast                 -0.3%     0.0%     0.0%    77.8%
Number of Participants          74       70       80       69
Previous                      0.3%     0.1%    -0.2%    77.8%
----------------------------------------------------------------
4CAST                        -0.1%     0.1%     0.4%    78.0%
ABN Amro                      0.2%     0.2%     0.5%     ---
Action Economics             -0.3%     0.1%     0.5%    78.0%
Aletti Gestielle              ---      ---      0.4%    78.1%
Ameriprise Financial          0.1%     0.1%     0.4%    78.1%
Banca Aletti                 -0.1%     0.0%     0.6%    78.2%
Banesto                       ---      ---      0.5%     ---
Bantleon Bank AG             -0.1%     ---      0.6%     ---
Barclays Capital              0.0%     0.2%     0.4%    78.0%
Bayerische Landesbank         ---      ---      0.3%    78.0%
BBVA                          ---      ---      0.4%     ---
BMO Capital Markets           0.3%     0.1%     0.6%    78.2%
BNP Paribas                   0.0%     0.1%     0.6%    77.9%
BofA Merrill Lynch            0.1%     0.1%     0.5%    78.1%
Briefing.com                  0.1%     0.1%     0.5%    78.2%
Capital Economics             0.0%     0.2%     0.3%    78.0%
CIBC World Markets            0.1%     0.2%     0.3%    78.0%
Citi                          0.1%     0.1%     0.6%    78.2%
ClearView Economics          -0.1%     0.1%     0.5%    78.2%
Comerica                      0.2%     0.0%     0.5%    78.3%
Commerzbank AG                0.0%     0.2%     0.4%    78.0%
Credit Agricole CIB           0.1%     0.1%     0.5%    78.0%
Credit Suisse                 0.1%     0.1%     0.0%    77.8%
Daiwa Securities America     -0.1%     0.1%     0.4%    78.0%
DekaBank                      0.0%     0.2%     0.3%    78.0%
Desjardins Group              0.0%     0.1%     0.8%    78.4%
Deutsche Bank Securities      0.1%     0.2%     0.5%    77.8%
Deutsche Postbank AG          0.0%     0.1%     0.5%     ---
DZ Bank                       0.2%     0.2%     0.5%    78.0%
Exane                        -0.3%     0.1%     0.6%     ---
First Trust Advisors          0.0%     0.1%     0.6%    78.1%
FTN Financial                -0.2%     0.1%     0.1%    78.0%
Goldman, Sachs & Co.          0.3%     0.1%     0.6%    78.1%
Helaba                        0.1%     0.1%     0.7%    78.4%
High Frequency Economics      0.1%     0.2%     0.6%    78.3%
HSBC Markets                 -0.1%     0.1%     0.4%    78.1%
Hugh Johnson Advisors         0.1%     0.2%     0.6%    78.1%
IDEAglobal                    0.1%     0.2%     0.5%    78.2%
IHS Global Insight            0.0%     0.1%     0.0%     ---
Informa Global Markets       -0.1%     0.0%     0.5%    78.1%
ING Financial Markets         0.2%     0.0%     0.6%    78.1%
Insight Economics             0.0%     0.2%     0.5%    78.1%
Intesa Sanpaulo               0.0%     0.1%     0.4%    78.0%
J.P. Morgan Chase            -0.1%     0.1%     0.2%    77.9%
Janney Montgomery Scott       0.0%     0.1%     0.3%    77.9%
Jefferies & Co.              -0.1%     0.2%     0.6%    78.2%
Landesbank Berlin            -0.2%     0.2%     0.5%    78.0%
Landesbank BW                 ---      ---      0.7%    78.3%
Market Securities             0.0%     0.1%     0.5%    78.1%
MET Capital Advisors         -0.1%     ---      0.0%     ---
Mizuho Securities             0.1%     0.0%     0.3%    78.0%
Moody’s Analytics            -0.1%     0.1%     0.7%    78.2%
Morgan Keegan & Co.           0.0%     0.0%     0.3%    78.0%
Morgan Stanley & Co.          0.1%     0.1%     0.4%    78.0%
National Bank Financial       0.1%     0.1%     0.7%    78.2%
Natixis                       0.2%     0.1%     0.3%    78.0%
Nomura Securities            -0.1%     0.1%     0.5%    78.1%
OSK Group/DMG                 ---      ---      0.2%     ---
Parthenon Group               0.1%     0.2%     0.5%    78.1%
Pierpont Securities           0.4%     0.1%     0.2%    77.9%
PineBridge Investments        0.3%     0.2%     0.3%     ---
PNC Bank                      0.1%     0.2%     0.5%    78.1%
Raiffeisenbank International  0.4%     0.1%     0.5%    78.2%
Raymond James                 0.1%     0.1%     0.3%    78.0%
RBC Capital Markets          -0.1%     0.0%     0.5%    78.2%
RBS Securities                0.4%     0.1%     0.4%    78.0%
Scotia Capital                0.1%     ---      0.6%    78.0%
SMBC Nikko Securities         0.8%     0.3%     0.7%    78.3%
Societe Generale             -0.3%     0.1%     0.2%    77.9%
Standard Chartered            0.1%     0.1%     0.5%    78.1%
State Street Global Markets  -0.1%     0.1%     0.4%    78.0%
Stone & McCarthy Research     0.0%     0.1%     0.3%    78.0%
TD Securities                 0.3%     0.2%     0.5%    78.0%
UBS                          -0.1%     0.1%     0.3%    77.9%
Union Investment              0.1%     ---      0.3%    78.1%
University of Maryland        0.1%     0.2%     0.4%    78.1%
Wells Fargo & Co.             0.1%     0.1%     0.5%    78.2%
WestLB AG                     0.1%     0.1%     0.5%    78.1%
Westpac Banking Co.           0.1%     0.1%     0.7%     ---
Wrightson ICAP                0.0%     0.2%     0.5%    78.1%
================================================================

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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