WASHINGTON - U.S. industrial output rose last month, as production of computers and productivity-enhancing business equipment offset declines for automobiles, appliances, and electricity, Federal Reserve figures showed Tuesday.
Industrial production increased 0.4% overall last month, as analysts had expected, after gaining 0.2% in June. The details behind these figures suggest that higher borrowing costs imposed by the Fed are slowing the market for expensive consumer goods without stalling companies' efforts to be more efficient.
"The Fed is probably seeing what it wants to see happen: a modest slowdown on the consumer side but growth on the business investment side, which will improve productivity and keep inflation under control," said Clare Zempel, chief investment strategist for Robert W. Baird & Co. in Milwaukee.
The Federal Open Market Committee meets next week to decide whether six increases in the overnight bank lending rate since June 30, 1999, have been enough to cool the economy and keep inflation in check. At 6.5%, the rate that banks charge one another for overnight loans is at a nine-year high. The rate helps determine what banks charge their customers.
Manufacturing output rose 0.5% last month after rising 0.4% in June. Mining output increased 1.7% after rising 0.9% in June, as higher energy prices encouraged the third straight gain for oil and gas production. Output at utilities fell 3.3% after declining 2.5% in June, the result of cooler temperatures in the Northeast.
The plant-use rate, which measures how much of capacity factories put to work, rose to 82.3% from 82.2% in June. Analysts had expected a rate of 82.1%.
The Fed may find comfort in the report, because the strongest gains were for further investments in efficiency through computers, related products, and machinery.
Worker productivity, a measure of output per hour worked, already had risen at a 5.3% annual rate in the second quarter after a 1.9% first-quarter increase, the Labor Department reported last week. As a result, labor costs fell.
Production of business equipment, which includes aircraft and machinery as well as electronics, rose 1.3% after a 0.2% increase the month before, Tuesday's Fed report said.
Output of computers, semiconductors, and communications equipment rose 3.6% after gaining 3.3% the previous month. Excluding those goods and related components, manufacturing output rose 0.1% after declining 0.1%.