Economy Shows Some Positive Signs

While other data on Thursday showed that industrial output shrank for the first time in seven months in November, much of the decline came from auto production, which analysts said had been held back by temporary supply disruptions.

“It looks like we have just hit a clear patch on the road to recovery, where things are going to speed up a little bit,” said Mark Vitner, a senior economist at Wells Fargo Securities in Charlotte, N.C.

Although growth is quickening from the third quarter’s 2 percent annual rate, analysts cautioned that troubles in debt-stricken Europe pose a major risk to the economy in the United States. The fourth quarter growth rate is expected to top 3 percent.

Much of the rest of the global economy is already weakening, with the euro zone — the 17 nations in the European Union that use the euro — expected to slip into recession.

In the United States, initial claims for state unemployment benefits dropped 19,000 to 366,000, the lowest since May 2008, the Labor Department said. That follows a report earlier this month that showed the jobless rate hit a 2 1/2-year low of 8.6 percent in November.

The economy’s firming tone was also emphasized by data showing an acceleration in factory activity in New York state and the mid-Atlantic region this month.

The Philadelphia Federal Reserve Bank said its index of business conditions rose to its highest level since March as new orders surged. A separate report showed business activity in New York state at its highest since May, with a strong rebound in new orders and an improvement in hiring.

But the Fed’s industrial production report took some of the shine off the two regional factory surveys. Output at the nation’s mines, factories and refineries dropped 0.2 percent in November after rising 0.7 percent in October.

The decline was led by a 0.4 percent drop in factory output, which reflected a 3.4 percent slump in motor vehicle production.

Economists, however, blamed a scarcity of auto parts from flood-ravaged Thailand for the weakness. They said it also most likely weighed on production of high-technology goods, which were down sharply for a third consecutive month.

“We are not worried about the health of the manufacturing sector,” said Michelle Girard, a senior economist at RBS in Stamford, Conn.

“Inventories are lean and firms will likely need to restock after a decent holiday season. Automakers also plan healthy production increases in the first quarter,” she said.

FedEx on Thursday provided a further signal the economy was gaining momentum, saying demand for residential delivery services was rising with “healthy growth” in online shopping.

Honeywell International, the maker of products ranging from cockpit electronics to control systems for large buildings, also struck an upbeat note on the economy and predicted strong sales growth next year.

Another report from the Labor Department showed wholesale prices rose 0.3 percent last month, reversing October’s 0.3 percent fall, as food prices climbed 1 percent. Excluding food and energy, producer prices were up a mild 0.1 percent.

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