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Automakers rebound in July to lift factory output

WASHINGTON (AP) — U.S. automakers rebounded in July to boost factory production by the most since the Japan crisis. But builders broke ground on fewer single-family houses, leaving home construction at depressed levels.

The mixed data suggest the economy remains fragile but is not on the cusp of another recession.

Overall industrial production, which includes output by utilities, mines and factories, rose 0.9 percent last month, the Federal Reserve said Tuesday. That’s the largest gain of the year.

Factory output, the largest component of industrial production, rose 0.6 percent. It was the biggest increase since the March 11 earthquake in Japan disrupted supply chains and slowed production at some U.S. auto plants.

The auto industry accounted for nearly all of the factory production gains. Motor vehicles and parts jumped 5.2 percent. Excluding that category, factory output grew only 0.2 percent.

Also driving industrial production higher was an unseasonably hot summer, which led more people to leave their air conditioners running. Utilities jumped 2.8 percent, the most since December. Mining output also increased.

The Commerce Department said in a separate report that builders began work on a seasonally adjusted 604,000 homes last month, a 1.5 percent decrease from June. That’s half the 1.2 million homes per year that economists say must be built to sustain a healthy housing market.

Single-family homes, which represent 70 percent of home construction, fell 5 percent. Apartment building rose more than 6 percent.

The stronger industrial production report confirmed other data that show the U.S. economy strengthened at the start of the July-September quarter after growing at a feeble annual rate of just 0.8 percent in the first half of the year.

Employers added more than twice the number of jobs in July than in each of the previous two months. The number of people applying for unemployment benefits this month fell below 400,000 for the first time since early April. And consumers spent more on retail goods in July than in any month since March.

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