Output at U.S. factories, mines and utilities rose by a smaller-than-expected 0.4 percent in July, while capacity use edged higher but also came short of forecasts, according to a government report Wednesday signaling a hot manufacturing economy may be ready to cool.

Capacity use rose to 82.4 percent, the highest rate since 82.5 percent in June 2000, from a downwardly revised 82.3 percent in June, the Federal Reserve said.

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Analysts polled by Reuters had expected a 0.5 percent gain in July industrial production and capacity use at 82.6 percent after June's output of 0.8 percent and capacity use originally reported as 82.4 percent.

The data could provide some comfort to an inflation-wary Federal Reserve, which paused a more than two-year campaign of interest rate hikes earlier this month in the hopes that a slowing economy would control price growth.

Manufacturing output rose just 0.1 percent in July after a strong 0.8 percent rise in June. Manufacturing capacity edged lower to 81.0 percent from 81.1 percent in June.

Much of July's production gain was concentrated in utility output, which rose 2.0 percent, for a capacity utilization rate of 88.2 percent. Mining output rose 0.8 percent, for a capacity utilization rate of 92.1 percent.

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