Industrial Output in US Improving

Industrial production in the U.S. probably accelerated in March as manufacturers continued to spearhead the recovery from the worst recession since the 1930s, economists said before reports today.

Output at factories, mines and utilities climbed 0.7 percent after a 0.1 percent increase in February that may have reflected shutdowns due to the blizzards, according to the median forecast of 78 economists surveyed by Bloomberg News. Other reports may show manufacturing gains extended into this month and homebuilders were less pessimistic.

Encouraged by rising sales in the U.S. and abroad, companies may keep rebuilding depleted inventories and investing in equipment, one reason why producers like Intel Corp. see better times ahead. Payrolls will probably climb further as factories ramp up, helping drive consumer spending.

“The economy is gaining traction, and manufacturing is leading the way,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “We have a positive feedback between a manufacturing recovery, employment and presumably then consumer spending.”

The Federal Reserve’s industrial production figures are due at 9:15 a.m. in Washington. Economists’ estimates ranged from gains of 0.3 percent to 1.2 percent. Manufacturing accounts for about 12 percent of the economy.

At 8:30 a.m., the Fed Bank of New York may report its Empire State Index rose to 24 in April, according to the Bloomberg survey median. The Philadelphia Fed’s general economic gauge, due at 10 a.m., may have climbed to 20 this month, the highest level so far this year, the survey showed. Readings greater than zero signal growth.

Fewer Claims

Also at 8:30 a.m., figures from the Labor Department may show the number of Americans filing claims for jobless benefits fell by 20,000 last week to 440,000, the survey median shows.

Mounting evidence that the economic expansion is broadening has pushed the Standard & Poor’s 500 Index up 8.6 percent this year. The measure closed yesterday at the highest level since September 2008.

A report at 1 p.m. may show the National Association of Home Builders/Wells Fargo index of builder confidence rose to 16 this month from 15 in March, according to the Bloomberg survey. Readings below 50 mean most respondents view conditions as poor.

The production report may also show capacity utilization, or the proportion of plants in use, climbed to 73.3 percent, the highest level since November 2008, according to the survey. The rate averaged 81 over the past four decades.

Inflation Risk

Economists track plant operating rates to gauge factories’ ability to produce goods with existing resources. Lower rates reduce the risk of bottlenecks that can force prices higher.

Excess capacity is one reason Fed policy makers see little risk of inflation. Fed Chairman Ben S. Bernanke yesterday said the rate of increase in consumer prices was “subdued,” and “moderation in inflation has been broadly based.” He also said economic growth will remain “moderate” as the economy contends with weak construction spending and high unemployment.

Intel, the world’s biggest chipmaker, is among companies benefiting from rising demand. The Santa Clara, California-based producer this week forecast record profit margins for the year and said sales will rise this quarter after a 44 percent gain in the first three months of the year.

Consumers served as a “big driver” of computer demand and corporate executives, more confident about their outlook, are replacing aging machinery, Chief Executive Officer Paul Otellini told analysts on an April 13 conference call. “We are optimistic about the prospects of our business for 2010 and beyond.”

                       Bloomberg Survey

==============================================================
                           Initial   Empire     Ind.   Philly
                            Claims    Manu.    Prod.      Fed
                            ,000’s    Index     MOM%    Index
==============================================================

Date of Release              04/15    04/15    04/15    04/15
Observation Period          10-Apr    April    March    April
--------------------------------------------------------------
Median                         440     24.0     0.7%     20.0
Average                        438     23.5     0.7%     20.0
High Forecast                  451     29.2     1.2%     27.1
Low Forecast                   415     16.0     0.3%     15.0
Number of Participants          44       51       78       54
Previous                       460     22.9     0.1%     18.9
--------------------------------------------------------------
4CAST Ltd.                     430     25.0     0.6%     20.0
Action Economics               440     23.0     0.5%     19.0
Aletti Gestielle SGR          ---      25.0     0.8%     20.0
Ameriprise Financial Inc       425     22.0     0.6%     17.0
Banesto                        450     24.0     0.4%     19.0
Bank of Tokyo- Mitsubishi      445     26.7     0.6%     15.9
Bantleon Bank AG              ---      26.0     0.7%     22.0
Barclays Capital               450     25.0     0.9%     19.5
Bayerische Landesbank         ---      ---      0.4%     ---
BBVA                           451     24.8     0.4%     20.7
BMO Capital Markets            440     24.0     1.0%     20.0
BNP Paribas                    430     26.0     0.8%     21.0
BofA Merrill Lynch Research    435     25.0     0.7%     17.5
Briefing.com                   425     24.0     0.5%     19.5
Brusuelas Analytics            445     26.2     0.9%     19.3
CIBC World Markets            ---      ---      0.8%     ---
Citi                           430     ---      0.7%     20.0
ClearView Economics           ---      22.0     1.0%     20.0
Commerzbank AG                 445     24.0     0.8%     19.0
Credit Agricole CIB           ---      24.0     0.6%     20.0
Credit Suisse                 ---      ---      0.4%     ---
Daiwa Securities America      ---      ---      1.0%     ---
Danske Bank                   ---      ---      1.1%     24.0
DekaBank                      ---      25.0     0.4%     23.0
Desjardins Group               445     20.0     0.8%     20.0
Deutsche Bank Securities      ---      23.5     0.6%     19.0
Deutsche Postbank AG          ---      ---      0.7%     ---
DZ Bank                       ---      24.0     0.8%     20.0
Exane                         ---      25.0     1.0%     22.0
First Trust Advisors           450     24.5     1.1%     20.0
Fortis                        ---      23.0     0.5%     19.0
Goldman, Sachs & Co.          ---      ---      1.1%     21.4
Helaba                         440     23.0     0.8%     20.0
High Frequency Economics       430     20.0     0.8%     18.9
HSBC Markets                   440     24.0     0.6%     21.0
Ibersecurities                ---      16.0     0.4%     19.8
IDEAglobal                     425     24.0     0.5%     20.0
IHS Global Insight            ---      ---      0.6%     ---
Informa Global Markets         445     20.0     0.4%     ---
ING Financial Markets         ---      23.0     0.8%     20.0
Insight Economics              445     25.0     0.8%     20.0
Intesa-SanPaulo               ---      24.0     0.6%     20.0
J.P. Morgan Chase              440     20.0     1.2%     17.0
Janney Montgomery Scott       ---      ---      1.1%     ---
Jefferies & Co.               ---      20.0     0.6%     20.0
Johnson Illington Advisors    ---      24.0     0.8%     20.0
Landesbank Berlin              415     ---      1.2%     15.0
Landesbank BW                 ---      18.0     1.0%     15.0
Maria Fiorini Ramirez Inc      450     ---      0.8%     ---
MF Global                      440     25.0     0.3%     22.0
Mizuho Securities              450     23.0     0.4%     19.0
Moody’s Economy.com            445     23.5     0.7%     19.0
Morgan Keegan & Co.           ---      ---      0.6%     ---
Natixis                       ---      ---      0.8%     ---
Nomura Securities Intl.       ---      24.0     0.8%     20.0
Nord/LB                        430     21.0     0.7%     17.0
Pierpont Securities LLC        430     ---      0.8%     ---
PNC Bank                      ---      ---      0.8%     ---
Raiffeisen Zentralbank        ---      ---      0.6%     ---
Raymond James                 ---      ---      0.6%     ---
RBC Capital Markets            432     25.0     0.6%     18.0
RBS Securities Inc.            450     ---      0.5%     ---
Ried, Thunberg & Co.           430     ---      0.9%     ---
Schneider Foreign Exchange     435     ---      0.6%     ---
Scotia Capital                 430     ---      0.4%     ---
Societe Generale              ---      25.0     1.0%     25.0
Standard Chartered            ---      ---      0.8%     ---
State Street Global Markets    447     24.7     1.1%     22.6
Stone & McCarthy Research      425     29.2     0.7%     27.1
TD Securities                  430     ---      0.5%     ---
Thomson Reuters/IFR            440     25.0     0.3%     20.0
UBS                            430     25.0     0.9%     25.0
UniCredit Research             440     ---      0.6%     ---
University of Maryland         440     ---      0.4%     ---
Wells Fargo & Co.             ---      ---      0.8%     ---
Westpac Banking Co.            440     25.0     0.8%     22.0
Woodley Park Research         ---      20.0     0.7%     17.1
Wrightson Associates           430     20.0     0.8%     19.0
==============================================================

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