US reports sharp growth in heavy industry production

Heavy industry in the US last month recorded its sharpest growth in production since July, and stockpiles expanded in December…

Heavy industry in the US last month recorded its sharpest growth in production since July, and stockpiles expanded in December at the second-fastest pace in more than two years, according to official figures released yesterday.

Together, following a report on Thursday showing the sharpest growth in non-vehicle retail sales in two years, they suggested the US economy was coming out of last year's "soft spot".

But fears of war and terrorism continue to affect business, consumer and investor sentiment. In a reflection of this, the University of Michigan said its index of consumer sentiment based on a survey of more than 500 households fell to a new, preliminary nine-year low of 79.2 in February.

There was greater pessimism about the economy's current condition and its future prospects, though a component of the index measuring expectations fell most sharply, suggesting renewed anxiety over Iraq and recent market turmoil.

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Separately, the Federal Reserve said output from the nation's factories, mines and utilities grew by a seasonally adjusted 0.7 per cent in January a six-month high that reversed December's 0.4 per cent decline.

The increase was more than double most forecasts and was led by a rebound in car production, but the gains were widespread. There was a sharp 1 per cent increase in production of business equipment, the biggest gain since September 2000. There was also a rapid 4 per cent gain in utility output, reflecting, in part, unusually cold weather across much of the north and east.

Meanwhile, the Commerce Department said inventories grew by 0.6 per cent in December the second-fastest pace of growth since October 2000. -