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December 15, 2010    

US industrial production up, consumer prices flat

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by Kay Murchie
US industrial production up, consumer prices flat

US industrial production recovered in November - rising by 0.4% after a 0.2% contraction in October.

The result beat expectations of a forecast of 0.3% and represented the biggest gain since July.

Meanwhile, the Labor Department today revealed consumer prices slowed in November. The Consumer Price Index edged up 0.1% - slightly below the forecast of a 0.2% rise.

The figures will reaffirm that the Federal Reserve will complete $600 million purchase of Government bonds – a policy branded “QE2“ (quantitative easing).

However, today’s figures had zero impact on stock markets as investors continue to worry about the debt crisis in the euro zone after Moody’s today said it has put Spanish bonds on watch for a possible downgrade due to its high funding requirements.

In other US news, the Federal Reserve’s policy-setting arm, the FOMC, elected to keep interest rates on hold between 0% and 0.25% yesterday – a move which was widely expected.

However, one of the biggest challenges facing the US economy currently is the rising unemployment rate – which climbed 0.2% last month to 9.8%.

The rate has now exceeded the 9% mark since May 2009 – the longest period of time on record.

In addition, the struggling housing market raises doubts after applications for home loans fell last month and home-builder sentiment hovers at record low levels, according to the latest National Association of Home Builders/Wells Fargo survey.

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