(In second bullet, corrects percentage rise to show
manufacturing output up 0.7 pct)
* Industrial production rises 0.4 percent in August
* Manufacturing output up 0.7 percent as autos surge
* New York state manufacturing slows a bit August
By Lucia Mutikani
WASHINGTON, Sept 16 U.S. industrial production
rose in August as a bounce back in motor vehicle assembly lifted
manufacturing output, a hopeful sign for the economy after
growth got off to a slow start in the third quarter.
Though another report on Monday showed a slight pull back in
factory activity in New York state this month, businesses were
upbeat about the future and new orders and shipments jumped, all
pointing to a pick up in manufacturing after it hit a speed bump
in the spring.
"Growth in the manufacturing sector is picking up and will
run faster over the balance of the year than has been the case
in recent months," said John Ryding, chief economist at RDQ
Economics in New York.
Industrial output increased 0.4 percent last month after
being flat in July, the Federal Reserve said. The rise was in
line with economists' expectations.
In a separate report, the New York Federal Reserve said its
Empire State general business conditions index slipped to 6.29
from 8.24 in August. A reading above zero indicates expansion.
However, firms expected an improvement in the months ahead.
The index of six-month business conditions touched its highest
level in nearly 1-1/2 years in September.
"We see this future optimism as more of a sign of the
willingness for businesses to invest if the economy rebounds
more aggressively, although the choppy path of capex intentions
suggest that there remains a lot of uncertainty," said Yelena
Shulyatyeva, an economist at BNP Paribas in New York.
In addition, a gauge of new orders rose sharply after almost
stalling in August. Shipments surged to their highest level in
more than a year.
The industrial production report showed manufacturing
production advanced 0.7 percent, more than reversing the prior
month's 0.4 percent drop, as automobile assembly rebounded 5.2
percent after slumping 4.5 percent in July.
But revisions to July's manufacturing data to show a big
drop in output took some of the shine from the August recovery.
Still, the industrial production report, which showed gains
almost across the board, pointed to some underlying momentum in
factory activity, which could support views of only a mild
slowdown in economic growth this quarter.
That should keep the Federal Reserve on course to announce
cuts to its monthly bond purchases when policymakers meet on
Tuesday and Wednesday to assess the economy's health.
Utilities output fell for a fifth consecutive month in
August. Mining production rose 0.3 percent last month, but that
was a big step back from July's 2.4 percent increase.
Last month, the amount of industrial capacity in use edged
up to 77.8 percent from 77.6 percent in July.
Industrial capacity utilization - a measure of how fully
firms are using their resources - was 2.4 percentage points
below its long-run average.
Officials at the Fed tend to look at utilization measures as
a signal of how much "slack" remains in the economy, and how
much room growth has to run before it becomes inflationary.
(Reporting by Lucia Mutikani; Additional reporting by Steven C
Johnson and Richard Leong in New York)