Ahead of the Bell: US industrial production

By DANIEL WAGNER

WASHINGTON

U.S. factories probably produced more goods in February, as they added more employees and workers put in longer hours.

Economists forecast that production by the nation's factories, mines and utilities increased 0.4 percent last month, according to a survey by FactSet. The Federal Reserve will release the report at 9:15 a.m. Friday.

Factory output rose 0.7 percent in January after soaring 1.5 percent in December. That was the biggest gain since December 2006, just before the housing bubble began to deflate.

Manufacturing has strengthened since the summer. Strong auto sales and growing business investment in machinery and other equipment are keeping factories busy and helping drive job growth.

The government said last week that manufacturers added 31,000 jobs in February. And factories have added 227,000 net jobs over the past year. The number of hours worked by factory employees also rose 0.9 percent last month, according to Capital Economics.

Two regional surveys released on Tuesday showed factories in the Northeast kept growing this month at a healthy pace and are hiring more workers. The surveys, conducted by the Federal Reserve banks of Philadelphia and New York, hit their highest readings since April 2011 and June 2010, respectively.

Busier factories are a hopeful sign for an economy on the mend. Manufacturing was among the first sectors to recover after the recession, and factories have contributed strongly to job gains and economic growth.

Manufacturing output slowed a year ago, when a massive earthquake and tsunami wiped out supply chains linking factories to Japan. Soaring auto production helped revive the sector's growth last fall and winter.

Overall industrial production was flat in January, mainly because Americans used less energy to heat their homes during the unseasonably warm winter. Utility output has dropped 8.3 percent over the past six months, according to Capital Economics.

Factory output has risen 16.7 percent from its low point during the recession, in June 2009. It is still 7.1 percent below its pre-recession peak, reached in December 2007.

Threats to factory growth remain. Rising fuel prices are increasing the cost of transporting goods to consumers. 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.

The economy grew at an annual pace of 3 percent in the final three months of last year, up from 1.8 percent the previous quarter.