U.S. Industrial Output Jumped 0.9% In April Despite Higher Interest Rates
WASHINGTON -- Production by U.S. factories, mines and utilities continued to accelerate in April, offering further evidence of the economy's strength in the face of rising interest rates.</br></br>Industrial output jumped 0.9% last month from March, its fastest pace in almost two years, the Federal Reserve said. Output is now 6.1% higher than it was a year earlier. The March gain, meanwhile, was revised upward to 0.7%, sharply higher than the preliminary estimate of a 0.3% increase. Taken together, the numbers suggest that U.S. industrial production continues to gain strength and that the April increase isn't a one-month anomaly.</br></br>With suppliers straining to keep up with strong consumer and business demand, the nation's capacity-utilization rate jumped 0.4% to 82.1%, the first time that the index has climbed above 82% in about two years. Utilization rates of less than 84%, however, suggest that manufacturers have enough slack to increase output without triggering production delays or bottlenecks</br></br>The report came as the Federal Reserve's Federal Open Market Committee prepared to meet here to consider a further interest-rate increase designed to slow the pace of the economy's growth while keeping inflation under wraps. The central bank has raised rates by a quarter of a percentage point five times since last June, but is widely expected to choose a more aggressive, half-point increase at its meeting today. A half-point move would bring the federal-funds rate -- the rate at which banks lend to each other overnight -- to its highest level in about nine years.</br></br>Still, yesterday's report offers some good news on the inflation front. Most of the overall increase in industrial output came about because of a 1.6% run-up in production of computers and other information-processing hardware and software. This and other technology have helped spark the massive productivity gains, which have held inflation in check in recent years. Technology production rose 2.7% in April, and is up an eye-popping 59% year over year. Consumer goods production, by comparison, increased 0.6% after being flat the last two months.