Ahead Of The Bell: Industrial Production

WASHINGTON (AP) — U.S. factories closed out 2011 with a big gain in output and that momentum likely carried over into January.

Economists forecast that industrial production, which includes output at the nation's factories, utilities and mines, increased 0.7 percent last month, according to a survey by FactSet. The Federal Reserve will release the report at 9:15 a.m. Eastern time Wednesday.

In December, industrial production rose 0.4 percent. And factory output, the largest component of the report, jumped 0.9 percent — the biggest gain in a year.

Busier factories are among the encouraging signs that show the economy could grow at a steady pace this year. The pickup in manufacturing coincides with five straight months of solid job growth, which has lowered the unemployment rate to 8.3 percent.

Several factors could weigh on growth. Gas prices are rising again. Europe's financial turmoil could weaken demand for U.S. exports. And another year of weak pay increases could force consumers to cut back on spending.

Still, the economy is growing and manufacturing is gaining strength. That has helped drive the slow but steady recovery.

Factory output is nearly 15 percent higher than it was in June 2009, when the recession ended. It is still 8.5 percent below its December 2007 peak.

Other reports show that manufacturing output is accelerating. The sector expanded at the fastest pace in seven months in January, according to a private survey by the Institute for Supply Management. New orders and order backlogs rose at the fastest pace in nine months.

Manufacturing companies have strongly boosted their efficiency in recent years, automating many plants and processes. That's allowed them to produce more with fewer workers.

Still, many are hiring. The government said factories added a net 50,000 workers in January, the most in a year. And manufacturers added a net 235,000 jobs in 2011, the biggest annual rise since 1997.