U.S. Industrial Production Rises By Most Since 2005 (Joe Richter)

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Industrial production in the United States rose last month by the most since November 2005, as manufacturing rebounded and the return of cold weather prompted a surge in utility use.

By Joe Richter

March 16 (Bloomberg) -- Industrial production in the United States rose last month by the most since November 2005, as manufacturing rebounded and the return of cold weather prompted a surge in utility use.

The 1 percent increase in production at factories, mines and utilities was more than forecast and followed a 0.3 percent January decline, the Federal Reserve's figures showed today. Capacity utilization, which measures the proportion of plants in use, rose to a five-month high of 82 percent from 81.4 percent.

The report suggests factories are making headway in their efforts to reduce inventories, pointing to a rebound in manufacturing that's been a source of weakness for the economy. Improved factory demand backs the Federal Reserve's forecast that growth will strengthen in the second half of the year.

``It's probably too soon to say the inventory correction has run its course, but firms are making progress,'' said Michelle Girard, senior economist at RBS Greenwich Capital in Greenwich, Connecticut. ``As we move into the spring, auto production is looking better, and in general it looks like the bulk of the inventory reduction is behind us.''