Figures from the Federal Reserve show that US factory output surged in December at its fastest pace in a year in December.
Stronger demand for business equipment, vehicles and energy offered the most visible evidence that manufacturing has bounced back from the depths of the recession.
The Fed said manufacturing increased 0.9% in December, the biggest gain since December 2010. Overall output at US factories, mines and utilities grew 0.4% in December, as warm weather dampened demand for energy produced by utilities.
Industrial output is less than 5% below its pre-recession peak, reached in September 2007. It has increased more than 14% since hitting a recession low in June 2009.
In December, factories made more goods that are used early in the production process - construction materials, metals and wood products. That is seen as a signal that production of finished products will increase in the coming months.
US factory gate prices fell in December
US producer prices fell in December as companies paid less for petrol and vegetables, although higher prices for light motor trucks pushed a measure of underlying inflation higher.
The Labor Department said its seasonally adjusted index for prices received by farms, factories and refineries fell 0.1%. Economists had expected wholesale prices to increase 0.1%.
Excluding volatile food and energy, core producer prices rose 0.3% last month, the biggest rise since July. That was above economists' expectations for a 0.1% gain.
The data appears to send mixed messages about inflation pressures in the US economy. A drop in energy prices has encouraged Wall Street and the US Federal Reserve to forecast inflation will cool in coming months.
Energy costs for businesses fell 0.8% last month, with petrol down 2.3%. Food prices fell 0.8%.
At the same time, higher core prices - if eventually passed on to consumers by businesses - might make the Fdderal Reserve more cautious about taking additional steps to help the still-struggling US economy.
That said, about 30% of the gain in core prices were due to an increase in prices for light motor trucks, the Labor Department said. Prices in the car sector have been affected in recent months by floods in Thailand that last year disrupted supply chains. Prices for light trucks rose 0.9% last month, the biggest rise since July.
