The operating rate at U.S. factories, mines and utilities in November rose to the highest level in nine years, the government said today in a report likely to heighten concern about inflation. The Federal Reserve Board said the use of industrial capacity rose 0.2 percentage points to 84.2 percent last month, the highest since 84.3 percent in November 1979. It was the seventh increase in eight months. As capacity use edges toward 85 percent, economists fear factories will have trouble producing enough goods to meet demand, leading to shortages and price increases. In an accompanying report, the Federal Reserve said industrial production climbed a brisk 0.5 percent in November following an identical 0.5 percent rise in October. The Fed's industrial production index now stands at 139.9 percent of its 1977 base, reflecting gains in light truck manufacturing and production of equipment for businesses. The jumps in capacity use and the production index were in line with economists' expectations. Most government statistics have portrayed a robust economy in October and November, particularly in the manufacturing sector, which has been bolstered by strong export sales caused by the lower value of the dollar, which makes U.S. goods more affordable on overseas markets. At manufacturing plants, the operating rate climbed to 84.5 percent last month, up from 84.3 percent in October. Producers of both durable goods _ ``big ticket'' items ranging from bicycles to battleships _ and non-durable goods reported higher rates. The rate at durable goods plants was 83.1 percent in November, up from 82.9 percent. Non-durable goods producers recorded a 0.1 percentage point gain to 86.5 percent. The Fed said the operating rate for primary metals industries jumped to 92.4 percent, the highest since December 1978. Most of the increase was attributed to increases at steel mills. Use of motor vehicle and parts manufacturing capacity rose for the fourth consecutive month to 85.4 percent, reflecting gains in light truck production. Automobile plants, a subcategory, slipped to 76.7 percent, down from 77.0 percent. The operating rate at utilities was 81.0 percent in November, up from 80.8 percent. It had hit a peak for the year in August of 83.9 percent because of a surge in electricity use for air conditioning. In the mining sector, which includes oil and gas drilling, the operating rate increased to 82.2 percent last month. It was 81.6 percent in October. The Federal Reserve's production index has not declined since September 1987, a reflection of the export-driven manufacturing boom. A related surge in spending for capital equipment to expand and modernize factories has accompanied the boom. Production in the manufacturing sector rose 0.5 percent in November, following an even stronger 0.6 percent gain in October. The Fed said automobiles were assembled at an annual rate of 7.6 million units, down slightly from October. But production of business equipment rose 0.4 percent following a flat month in October and stood 8.8 percent higher than a year ago. Output at mines, which includes oil and gas drilling, rose 0.6 percent in November after three consecutive declines. Production at utilities increased 0.4 percent, on top of a 0.6 percent jump in October. Total output at factories, mines and utilities was 5.1 percent higher than a year ago.
