Full steam ahead for US industry

US factories are working at near capacity

US industrial output surged by 0.8% in April, beating forecasts and reaching the highest level since July 2000, a Federal Reserve report said.

American factories are working at 81.9% of their capacity, raising the threat of inflationary price rises as they approach their production limits.

But other April data released on Tuesday dampened inflation fears and the need for more interest rate rises.

Core wholesale prices rose just 0.1% and housebuilding hit a 17-month low.

Housebuilders slow down

The Federal Reserve said wholesale prices, the costs charged by factories, famers and other producers, rose by 0.9% in April due to a big jump in gasoline prices.

But core wholesale prices, with food and fuel stripped out, rose by just 0.1%.

US gasoline prices jumped in April

This is lower than forecast and shows that US factories are not yet having to pass on rising raw materials costs to their customers, thus putting upward pressure on inflation.

Elsewhere, Commerce Department figures showed that US housebuilders were slowing down.

Housing starts fell for the third month in a row in April, by a higher than expected 7.4%.

Building permits, a sign of future house construction, fell by 5.4%.

The figures indicate that housebuilders's inventories of unsold homes are increasing as the US housing boom continues to tail off.