Industrial Output Bodes Rebound

U.S. industries increased production for a second straight month in May and businesses showed signs of rebuilding depleted inventories, a move that could mean even greater output and more jobs.

“The economy clearly has rebounded from its weakness last year,” said economist Gary Thayer.

Richard Berner, an economist at Mellon Bank in Pittsburgh, agreed, although he said he expects economic growth to slow from a 4 percent annual rate this quarter to about 3 percent in the next.

The Federal Reserve said Friday that output at the nation’s factories, mines and utilities rose 0.7 percent in May after an identical advance a month earlier.

At the same time, the Commerce Department reported that business inventories rose 0.4 percent in April after shrinking 0.3 percent the previous month.

Financial markets mostly ignored the reports. The Dow industrials fell for the fifth straight day, slipping 8.50 to 5,649.45.

In other economic reports this week:

Retail sales increased 0.8 percent in May, rising to a seasonally adjusted $205.5 billion from $203.9 billion a month earlier.

Strong automobile sales accounted for much of the increase, the Commerce Department said. Auto dealerships had a 2.1 percent increase in sales. Leaving out motor vehicles, sales increased 0.3 percent.

Another big jump in gasoline and natural gas prices pushed the Consumer Price Index up 0.3 percent last month. The Labor Department said consumer prices rose at an annual rate of 4.1 percent during the first five months of 1996, up sharply from the 2.5 percent increase for all of 1995.