Originally created 06/17/04

Industrial production surges in May



WASHINGTON -- Big industry production surged by 1.1 percent in May, the strongest showing in nearly six years, a fresh sign that manufacturers are on a firm recovery path and the national economy possesses good momentum.

The sizable increase reported Wednesday by the Federal Reserve came after a strong 0.8 percent rise in April. The 1.1 percent advance - better than the 0.6 percent rise that some economists were expecting - represented the biggest gain since August 1998.

Factory production - the biggest slice of industrial activity tracked by the Fed - rose by 0.9 percent in May, up from a 0.7 percent increase the month before.

Output at gas and electric utilities, which increased by 1.5 percent in April, went up by 3.3 percent, reflecting unseasonably warm weather, the Fed said. Mining production, however, dipped by 0.4 percent last month, following a 0.9 percent rise.

In other economic news, builders broke ground on fewer housing projects in May, but even with the decline the level of activity was quite brisk. Total housing permits were the highest in over three decades.

The Commerce Department reported that the number of residential units under way came in at a seasonally adjusted annual rate of 1.97 million last month. While that represented a 0.7 percent drop from April, the pace exceeded analysts' forecasts. They were calling for a construction rate of around 1.95 million units.