Factory output leads gains in economy

WASHINGTON - The economy appears to be settling into a period of moderate but enduring growth.

Factories are producing more goods, retail prices are low, and the malls are full ahead of the holidays.

Still, the housing market remains a major drag on the economic recovery. Builders, who are competing with millions of foreclosed properties, are pessimistic about their prospects over the next six months.

The latest government and private-sector reports support a more optimistic but measured view that the economy is growing at a faster rate, and that 2011 will be better than most economists thought just months ago.

Manufacturers have been a major reason for the momentum. Factory output grew 0.3 percent in November, the fifth straight month of gains, the Federal Reserve said Wednesday. Production of computers, industrial equipment, appliances and electronic goods all rose. That's evidence that companies and consumers are spending more, economists said. Factory output has recovered by 10.6 percent since its low point in June 2009, according to Steven Wood, chief economist with Insight Economics Llc. Still, it remains 9.1 percent below its peak in April 2007.

Retail sales rose in November, the fifth straight monthly gain. That's a sign the holiday shopping season will be a healthy one. One reason for that is tame inflation. Consumer prices barely changed in November, the Labor Department said . Small increases in food and energy costs pushed the Consumer Price Index up 0.1 percent.

Excluding food and energy costs, core consumer prices rose 0.1 percent, the first increase in four months. In the past year, the core index rose 0.8 percent. That's slightly higher than October's 0.6 percent annual increase, which was the lowest since the index began in 1957.

The National Association of Home Builders said Wednesday that its monthly reading of builders' sentiment remained unchanged in December at 16.

While that's the highest reading since June, any reading below 50 indicates negative sentiment about the market. The index hasn't been above that point since April 2006. - AP