High-Tech Goods Fuel 17th Straight Monthly Output Hike

Hearty demand for high-technology products helped power U.S. industrial output higher for a 17th straight month in May, the Federal Reserve said on Thursday, though consumer goods production weakened.

Output by factories, mines and utilities was up 0.4% last month after rising 0.7% in both April and March.

Separately, a monthly survey from the regional Federal Reserve Bank of Philadelphia said manufacturing activity in the mid-Atlantic region grew at the slowest pace in 19 months during June. Its index of business activity dipped to 1.7 in June from 20.2 in May, the lowest reading since November 1998.

A third report, from the Labor Department, confirmed that any slowdown still was modest, as the number of newly idled workers last week fell a sharp 16,000, to 296,000. But a four-week moving average, which smooths out week-to-week volatility, edged up to 295,750 claims from 291,250 a week earlier.

The Fed report raised some concern that the economy might not be slowing enough to head off another interest-rate increase when the Fed’s Federal Open Market Committee meets on June 27-28.

But the report showed a definite easing in the rate of growth of manufacturing, which was up 0.3% in May after much bigger gains of 0.6% in April and 0.8% in March. It was the smallest monthly gain in manufacturing activity since a matching 0.3% rise last September.

“I think that definitely we are slowing down,” said economist Cynthia Latta of Standard & Poor’s/DRI in Lexington, Mass., who added that she did not expect another interest-rate increase this month.

“The housing market has peaked and we’re not going to get any more positive growth on that, and new vehicle sales, while still strong, show no more growth; so those two key sectors will produce some moderation in GDP [gross domestic product] growth,” Latta said.

The Fed report said the big auto makers scaled back their annual assembly rates for new cars and trucks to 13.3 million in May from 13.4 million in April.

Besides the slower rate of increase for manufacturing, utilities output rose 1.4% in May, only about half the 2.6% jump in April. Mining production was up 0.3% following a 0.4% April gain.

Within the manufacturing sector, the Fed said, production of business equipment--which includes computers--gained 0.7% last month after a 1.1% rise in April.