Industrial output in the U.S. rose to its highest level in five months in August as auto makers led the manufacturing sector into recovery.
Industrial production increased 0.4 percent last month after declining in July and in two of the last four months, according to the Federal Reserve. Economists had forecast a 0.5 percent gain.
Lawrence Summers, former Treasury secretary under President Clinton and economic advisor to President Obama told the president in a phone call Sunday morning that he does not want to be considered for the Chairmanship of the Federal Reserve. In a subsequent letter he said "I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interests of the nation's ongoing economic recovery."
He had been considered one of the leading candidates to replace Ben Bernanke when his term end January 31st and was thought to favor a relatively more restrictive view of the Federal Reserve role in the U.S. economy that the current Chairman or his now likely successor, Janet Yellen.
The dollar fell across all its major counterparties on the open in Asia dropping more than 150 points versus the euro and almost 100 points against the yen. American equities were also strongly higher with the Dow up 157 points at 11:38 am.
Factory output climbed 0.7 percent in August, more than the 0.5 percent predicted by analysts. The prior month was revised down to -0.4 percent from -0.1 percent. Output has declined in three of the last six months. Automobile production shot up 5.2 percent after falling 4.5 percent in July. Utility output slipped 1.5 percent, mining rose 0.3 percent.
The amount of the U.S. industrial plant in active use in August edged up to 77.8 percent from 77.6 percent in July. Economists had expected a rise to 77.9 percent.
Utilization has been rising steadily since the end of the recession in June 2009 but it remains 2.1 percent below its 40 year average.
In 2010 utilization averaged 74.0 percent a month, in 2011 76.5, and last year 77.6. In the first eight months of this year average utilization have averaged 77.9. In the two decades before the 2008 crash the average was 80.8 percent each month.
Chief Market Strategist