Newspaper article THE JOURNAL RECORD

Utility, Mining Lead Rise in Nation's Factory Output

Newspaper article THE JOURNAL RECORD

Utility, Mining Lead Rise in Nation's Factory Output

Article excerpt

WASHINGTON -- U.S. industrial production increased in May, driven mainly by rebounding utility and mining output. Factory production posted a subdued gain, a sign the economy is feeling effects of the Asian crisis.

Output at factories, mines and utilities rose 0.5 percent last month after rising 0.3 percent in April. Previously, the Fed reported that industrial production rose 0.1 percent in April. Before Tuesday's report, analysts had expected a 0.4 percent increase in May production.

The slowdown to a 0.2 percent rise in manufacturing in May from April's 0.5 percent gain can "be chalked up as another negative influence coming out of the Asian financial crisis," said William Sullivan, an economist at Morgan Stanley Dean Witter in New York. Utility output rose 2.8 percent during May while output at mines rose 1.2 percent. On the inflation front, the plant-use rate -- which measures the amount of industrial capacity in use -- barely rose. That suggests the 1990s wave of capital investment is paying dividends and helping businesses meet demand with little if any strain that could push prices higher. "There's ample spare capacity," Sullivan said. The plant-use rate rose to 82.2 percent in May from 82.1 percent in April, the Fed said. Initially, April's plant-use rate was reported as 81.9 percent. Other reports Tuesday presented a mixed picture, and suggest the economy "is balanced on a wire, resisting inflation and showing pretty positive growth," said Paul Taylor, an economist at America's Community Bankers in Washington. Prices U.S. consumers pay for goods and services rose 0.3 percent in May following a 0.2 percent increase in April, as food and energy costs moved higher, Labor Department figures showed. The inflation rate will probably slow in the months ahead, reflecting a drop in oil prices since May, analysts said. Excluding food and energy, the core rate of the consumer prices index rose 0.2 percent in May after rising 0.3 percent in April. Home building, meantime, remained at an impressive level. Construction starts of new houses, while declining 0.7 percent in May for the third straight month, held at a lofty 1. …

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