Industrial Production Rises 0.8 Percent in June

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Industrial production rose significantly in June, reflecting advances in manufacturing, mining and auto production.

The Federal Reserve reported Monday that output at the nation's factories, mines and utilities jumped by 0.8 percent last month following a gain of 0.1 percent in May. The latest increase was stronger than expected; analysts had anticipated an increase of 0.4 percent.

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The rise in production also marked a 4.5 percent increase over June 2005.

Production of autos and auto parts rose a robust 3.3 percent in June, swinging from a 1.3 percent drop the month before as the industry struggled with soaring gasoline prices that sapped demand for sport utility vehicles.

Mining production rose 1.2 percent and manufacturing gained 0.7 percent from the previous month, the figures showed.

The strength in industrial production in June also included a 1.7 percent rise in output of oil and natural gas.

May's production was revised to a rise of 0.1 percent from a previous decline of the same amount — the first decrease since January.

Economists generally believe that manufacturing will slow in coming months as overall economic growth slows.

The economy expanded at a sizzling pace of 5.3 percent in the first three months of the year but many analysts believe that will slow to around 3 percent in the April-June quarter, as consumers struggle with rising interest rates, soaring gasoline prices and cooling home sales.

The increase in June put U.S. industry operating at 82.4 percent of capacity, up from a May operating rate of 81.8 percent of capacity.

The Federal Reserve keeps a close watch on the operating rate to see if it is approaching levels where bottlenecks could develop and threaten to boost inflationary pressures.

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