updated 7/15/2005 9:47:13 AM ET 2005-07-15T13:47:13

Industrial production roared ahead in June at the fastest pace in 16 months, with half of the gain attributed to a big increase in output at the nation's utilities, reflecting the onset of hot weather.

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The Federal Reserve reported that industrial output increased 0.9 percent in June, three times faster than the 0.3 percent rise in May. The good performance provided further evidence that the nation's factories, mines and utilities have rebounded from a spring slowdown.

Meanwhile, the Labor Department provided a second dose of good news on inflation, reporting that prices at the wholesale level were unchanged in June even though gasoline prices shot up at the fastest pace in eight months. On Thursday, the government reported that consumer prices were also frozen in June.

Taken together, the two reports showed an economy that was expanding at a solid pace with inflation well contained.

The 0.9 percent rise in industrial production was the best showing since a 1.1 percent increase in February 2004. More than half of the gain came from a 5.3 percent surge in utility output, reflecting warmer-than-usual temperatures in June. Utility production had been down in both May and April as unseasonably cool weather in many parts of the country had depressed demand for electricity to power air conditioning.

Manufacturing output was up a solid 0.4 percent in June following an even stronger 0.5 percent rise in May. Both gains had followed two months of declines which had raised concerns that the manufacturing sector, the hardest hit in the 2001 recession, could be faltering again.

Output at mines, a category that includes oil production, rose by 0.4 percent in June following a 0.2 percent May increase.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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