American factory output of vehicles, computers and construction material grew last month, resulting in a 0.9% increase in output, according to data released by the Federal Reserve.
Total industrial production, including mines, utilities and factories, grew 0.4% last month. Fourth quarter industrial output was up 3.1% annually for a tenth quarter of consecutive growth.
According to a senior strategist for State Street Global Markets LLC, manufacturing has been a significant contributing factor to America's recent growth spurt. Companies are beginning to restock their warehouses, and business equipment production has improved 0.8% thanks to higher demand for computers and machinery.
To keep up with growing demand, manufacturers created 23,000 jobs last month, which is the most in five months, says a Labor Department report.
Higher consumer and business spending, as well as tighter inventories, are expected to maintain factory growth and continue boosting employment. In addition, US manufacturing is increasing due to exports to emerging economies.
Global Economic Strains
The World Bank has reduced its 2012 global growth forecast to 2.5% from its summer prediction of 3.6%, the largest forecast reduction in three years.
The European debt crisis is the main hurdle preventing lasting global economic security. It is also hampering American manufacturing growth by cutting back on American exports to the Euro zone.
Economists and analysts predict a possible recession for the Euro zone during the first half of 2012.
Home-Builder Confidence, Construction Output Improve
US home-builder confidence rose the highest level in four years this month as buyer traffic and sales improved. According to the National Association of Home Builders, construction workers' sentiment rose to 25. Anything below 50 is considered poor, but the improvement was still much higher than expected and improved in all four regions.
Low interest on loans, population growth and lower prices are expected to increase housing demand.
As consumer confidence and the employment rate improve, more and more Americans are expected to buy homes this year. Construction material output grew 1% in December, the most in five months.
Many analysts believe this is a ripple effect from recent improvements in the housing market. A rise in construction materials is usually a sign that the production of finished products will increase in the next few months.
Key Statistics - Factory Output in the US (source: Federal Reserve)
- Manufacturing in the US saw the biggest gain last month since December 2010.
- Overall industrial output of US factories, mines and utilities grew 0.4% in December 2011.
- Home builder confidence rises, with construction material output up 1%.