Continuing its erratic behavior of recent weeks, the nation's money supply shot upward by $3 billion in the week ended Nov. 7, the Federal Reserve reported yesterday.

After a series of large revisions due in part to errors by a large New York bank, the money supply had been declining since early October bringing it almost back within the bounds of the Fed's target ranges.

Financial markets, unsettled early last month by a series of credit tightening moves by the Federal Reserve, had been calming once again. The latest surge in the money supply could lead to an increase in short-term interest rates in anticipation of further tightening by the Fed.

Separately, the Fed reported yesterday that industrial production edged up 0.1 percent last month, as small increases in the output of consumer goods and of materials were mostly offset by strike-related declines in production of business equipment.

Federal Reserve officials have said repeatedly they do not make policy changes on the basis of the weekly money supply numbers, but financial markets often behave as if they did. But after the gyrations and errors of the past month, many analysts responded cautiously to the new figures.

The huge increase could be one of "a number of blips," said William Gibson of Smith, Barney, Harris, Upham & Co. "I think the Fed understands that and will not be under intense pressure for further tightening. I would guess we'll see a sizable drop (in the money supply) next week."

M-1, the total of currency in circulation and checking account deposits in commercial banks, rose $3 billion to $379.2 billion, the Federal Reserve said. The prior week's figure was revised downward by $300 million.

The broader measure, M-2, rose $4.4 billion to $942.2 billion. That prior week number was also revised downward, by $400 million.

The latest weekly figures leave M-1 above its average for all of October, but below the levels reached early in the month.

Meanwhile, the New York Federal Reserve Bank reported commercial and industrial loans fell at New York City banks by $29 billion in the week ended Wednesday. A major goal of the Fed in tightening policy last month, which it appears to be achieving, was to slow growth of such loans.

In its release on industrial production, the Fed said output of consumer goods rose 0.3 percent in October. Auto assemblies were little changed from September, at a seasonally adjusted annual rate of 7.9 million units, but down 11 percent from the average for the first half of the year.

The output of materials also rose by 0.3 percent last month. Production of basic metals, such as steel, dropped slightly, but output of energy materials rose 0.8 percent primarily because of an increase in coal production.

The overall index of industrial production rose to 152.5, with output in the base year, 1967, equal to 100.