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U.S. Industrial Production Unexpectedly Dips 0.1% In October

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Industrial production in the U.S. unexpectedly saw a modest decrease in the month of October, the Federal Reserve revealed in a report on Friday.

The report said industrial production edged down by 0.1 percent in October after climbing by an upwardly revised 0.7 percent in September.

Economists had been expecting production to inch up by 0.1 percent compared to the 0.6 percent increase originally reported for the previous month.

The unexpected drop in production was partly due to a pullback in utilities output, which fell by 1.1 percent in October after jumping by 4.5 percent in September.

Mining output also fell in October after rising for six consecutive months, dropping by 1.6 percent following a 1.0 percent increase in the previous month.

On the other hand, the Federal Reserve said manufacturing production rose for the third straight month, climbing by 0.3 percent in October after inching up by 0.1 percent in September.

Commenting on the report, Rob Carnell, chief international economist at ING, said the headline appears worse than the underlying picture.

"Most of the softness was concentrated in utilities and mining, in particular natural gas extraction, where on-going price softness seems to have weighed on extraction activity and production has been feeble for some months," Carnell said.

He added, "Together with a limp report from the Empire Manufacturing survey for November, delivered before the production data, the tone of news flow since Janet Yellen's Senate testimony, where she spelled out that taper required a notable improvement in the economy - has been mediocre."

The Federal Reserve said the capacity utilization rate dipped to 78.1 percent in October from 78.3 percent in September, while economists had expected the rate to come in unchanged.

Capacity utilization in the manufacturing sector inched up to 76.2 percent, while capacity utilization in the mining and utilities sectors fell to 88.7 percent and 78.3 percent, respectively.

Additionally, the Fed said the level of industrial production in October was equal to its 2007 average and was 3.2 percent above its year-ago level.

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