Industrial output up 0.3 percent

WASHINGTON Industrial production at the nation's factories,utilities and mines rose by 0.3 percent in November, the 11thconsecutive month of increased output.

The Federal Reserve reported today that the increase followed a0.8 percent gain in October, stronger than the Fed previouslythought.

November's advance was in line with the 0.3 percent range ofincrease many analysts were expecting. Gains in output were fairlybroad-based except for utilities where, as many analysts anticipated,output fell. Unusually warm weather last month depressed demand.

Operating capacity held steady at 81 percent, the same as inOctober. Generally, an operating capacity of 84 percent would alarmeconomists, indicating that factories just can't produce fast enough -which could lead to price increases.

In a separate report, the Commerce Department reported today thatstockpiles of goods on shelves and backlots rose by 0.2 percent inOctober, the smallest gain in six months.

That pushed total business inventories to $1.26 trillion.October's performance was weaker than the 0.4 percent increase manyanalysts were expecting.

While it marked the slowest growth in business inventories sinceApril, when they rose by 0.2 percent, October's gain also marked theninth straight monthly increase this year.

In September, total business inventories rose by 0.4 percent, thefastest pace in six months.

Meanwhile, sales increased by a solid 0.5 percent in October, thelargest gain since August. Sales fell by 0.2 percent in September,the first decline since the beginning of the year.

The increase in October's sales brought the inventory-to-salesratio to 1.33, meaning it would take 1.33 months to exhaustinventories at the October sales pace.

Federal Reserve Chairman Alan Greenspan and his colleagues meetnext week to decide whether to boost interest rates. Many economistsbelieve the central bank will leave rates unchanged, citing concernsabout problems that might arise from the Y2K computer changeover.However, the Fed is expected to bump up rates again in February orMarch because the economy is still growing at a rapid pace that couldspark inflation down the road, economists said.