Output at the nation's factories, mines and utilities rose 0.3% in August, the seventh consecutive monthly advance, the government said Tuesday.
The Federal Reserve said the August increase was the smallest increase since a 0.1% rise in April. It followed gains of 0.8% in July and 0.7% in June and May.
Analysts said the moderate August increase showed that the nation's industrial sector is still recouping losses inflicted during a two-year period by heavy competition from foreign-made products.
"The August rise in industrial production is very positive, coming after last month's big increase," said Allen Sinai, chief economist of Shearson Lehman Bros. in New York. "The industrial expansion is now widespread and appears to be taking on a life of its own."
The increase in industrial production in August was held back by an 11% drop in output of passenger cars. Autos were assembled at an annual rate of 5.9 million units in August, down from a July rate of 6.7 million units.
Auto makers have been forced to reduce output and reinstitute incentive sales programs in an effort to reduce a huge backlog of unsold cars. The cut in production of passenger cars was offset, however, by a big jump in output of light trucks, the report said.
Output at all U.S. manufacturing plants rose 0.3% in August, one-third of the 0.9% July increase.
Production at factories making durable goods, items expected to last three or more years, was up 0.5% while output of non-durable goods edged up 0.1%.
Output of business equipment, which has grown rapidly this year, increased a sharp 1% in August.
Overall, industrial production is 4.5% higher than a year ago, with the index standing at 130.7% of its 1977 base of 100.