Washington (AP) — U.S. factories made more cars, clothing and other goods than expected in August, and inflation remained in check in the early stages of a broad economic recovery.
The Federal Reserve said Wednesday that output at the nation’s factories, mines and utilities rose 0.8 percent in August. Economists surveyed by Thomson Reuters expected a 0.6 percent increase. Last month’s gain marked the second straight increase after the global recession dried up the appetites of customers worldwide.
“The back-to-back gains in industrial production provide further evidence the recession ended around July,” according to a note to clients attributed to Joseph LaVorgna, chief U.S. economist at Deutsche Bank.
Meanwhile, the Labor Department reported that the so-called “core” Consumer Price Index, which excludes volatile food and energy prices, rose 1.4 percent over the 12 months ending in August. That is well within the Fed’s comfort zone and means the central bank faces little pressure to raise its benchmark interest rate, a step it takes to ward off high inflation. The Fed has reduced the interest rate it charges banks for overnight loans to a record low of nearly zero in an effort to revive the economy.
Industrial production rose in a fairly broad-based pickup in August, according to the Fed data. The central bank also said production jumped 1 percent in July, twice as much as originally reported. Car manufacturing drove that gain.
Factory output — the single-biggest slice of overall industrial activity — also rose for the second straight month. It posted a 0.6 percent gain in August, following a 1.4 percent rise in July.
On the inflation front, the CPI rose 0.4 percent in August, after a flat reading in July. Wall Street economists expected a 0.3 percent increase, according to a survey by Thomson Reuters. Prices fell 1.5 percent in the past year, as gas prices dropped sharply from record levels last summer.
The core price index rose 0.1 percent, matching expectations. The 1.4 percent gain over the last 12 months is the smallest such increase in more than five years.