updated 2/15/2008 2:22:18 PM ET 2008-02-15T19:22:18

The nation’s industrial output posted a modest increase in January as strength at utilities offset weakness in manufacturing and mining.

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The Federal Reserve reported Friday that industrial production rose by 0.1 percent in January, matching the December increase. The slight January gain was in line with economists’ expectations.

Manufacturing output was flat last month, the poorest showing in three months, as factories are feeling the effects of a significant economic slowdown that has raised worries that the country is slipping into a recession.

Output fell at auto plants, which have been struggling with weak demand, and was also down at factories making wood products and furniture, sectors which have been hit hard by the prolonged slump in housing.

By contrast, output was up at factories producing computers, electronic products and aerospace equipment.

Output was down 1.8 percent in mining, a category that includes coal production and oil exploration. Output at the nation’s utilities was up 2.2 percent in January, reflecting the cold weather that hit much of the country.

The slump in housing and a severe credit crunch have dragged down overall economic growth, which skidded to a barely discernible 0.6 percent annual rate in the final three months of last year.

A growing number of economists believed that the gross domestic product will turn negative in the current January-March quarter and in the April-June period as well, fulfilling the classic definition of a recession.

In an effort to ward off a full-blown recession, Congress quickly passed a $168 billion economic stimulus plan that will provide rebate checks to 130 million people starting in May.

In addition, the Federal Reserve has aggressively cut interest rates, and Federal Reserve Chairman Ben Bernanke signaled in testimony to a congressional committee on Thursday that the central bank was prepared to do more to boost growth.

The labor market shed 17,000 jobs in January, the first monthly job loss in more than four years, a decline that was led by weakness in construction and manufacturing.

Construction companies cut 27,000 jobs last month and have lost 284,000 since employment peaked in September 2006 as the five-year boom in housing was coming to an end. Factories eliminated 28,000 positions in January, and have cut 269,000 jobs over the past 12 months.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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