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updated: 8/15/2012 11:48 AM

U.S. industrial production rose 0.6 pct. in July

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Associated Press

WASHINGTON -- U.S. factories made more cars, computers and airplanes last month, a hopeful sign that manufacturing is recovering after a weak spring.

Industrial production, which includes output at factories, mines and utilities increased 0.6 percent in July from June, the fourth straight monthly increase, the Federal Reserve reported Wednesday.

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Factory output, the most important component of industrial production, rose 0.5 percent, the second straight increase. Factory output has risen 21.9 percent since its recession low hit in June 2009 and is just 1.7 percent below the pre-recession peak for factory output reached in April 2007.

Mining output, which includes oil and gas production as well as coal mining, increased 1.2 percent in July. Utility output rose 1.3 percent, largely because of hot weather in many parts of the country.

Manufacturing helped lift the economy out of the Great Recession three years ago. But it has slowed this spring as consumers cut back on spending and businesses invested less in machinery and equipment. Some worry that manufacturing could weaken further in coming months if Europe's financial crisis and slower global growth cut demand for U.S. exports.

Adding to those worries Thursday was a survey from the Federal Reserve Bank of New York that showed manufacturing conditions in the New York region shrank in August. The Empire State index fell to -5.9, down from a reading of 7.4 in July.

Still, analysts noted that the growth in U.S. factory output in July and June suggests the spring slowdown in manufacturing may be temporary. July's increase was led by a 3.3 percent surge in output of motor vehicles and parts. Production of computers and primary metals such as steel also showed big gains.

"Despite the deteriorating global backdrop, U.S. manufacturing continues to expand," said Paul Ashworth, chief U.S. economist at Capital Economics. "Manufacturing is hanging in there."

A handful of reports in recent weeks suggest the economy may be emerging from its spring slump.

Employers added 163,000 jobs, the best job growth since February. Consumers increased their retail spending in July by the most in five months. And the value of U.S. exports reached a record high in June.

Still, the economy remains weak. U.S. manufacturing activity shrank in June and July, according to a survey by the Institute for Supply Management. June was the first time the survey showed manufacturing contracted in three years.

Economic growth slowed to an annual rate of 1.5 percent in the April-June quarter, down from 2 percent in the January-March quarter and 4.1 percent in the final three months of 2011.

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