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At a glance
Other economic reports released Wednesday include:
•Wholesale prices: Sharp drops in fuel and food costs reduced a measure of U.S. wholesale prices in April by the most in three years. Outside those volatile categories, inflation stayed tame. The producer price index, which measures price changes before they reach the consumer, fell a seasonally adjusted 0.7 percent in April from March, the Labor Department said. It was the second straight monthly decline and the steepest since February 2010.
•Builder sentiment: The National Association of Home Builders/Wells Fargo builder sentiment index rose to 44 in May from 41 in April. The increase was the first month-to-month gain since December. Readings below 50 suggest negative sentiment about the housing market. The last time the index was at 50 or higher was in April 2006.
Associated Press
A worker at Shinola in Detroit inspects wristwatch housings. Production at U.S. factories fell in April.

Output slows for most goods

Weakened global economy pinching production in US

– U.S. manufacturers cut back on production in April, as auto companies cranked out fewer cars, factories made fewer consumer goods and most other industries reduced output. The weakness suggests economic growth may be slowing.

The Federal Reserve said Wednesday that factory output dropped 0.4 percent in April, the third decline in four months. Production of autos and auto parts fell 1.3 percent in April. The drop is likely temporary because automakers are reporting stronger sales.

Still, the declines in April were broad-based. Factories produced fewer machines, electrical equipment, clothes, appliances, furniture and primary metals. Manufacturers made more computers and electronic products, among the few areas that showed gains.

Factories are making fewer goods in part because of a weaker global economy, which has reduced demand for U.S. exports. And exports are likely to stay sluggish because the recession of the 17 European Union countries that use the euro has extended into its sixth quarter.

“American manufacturers are continuing to struggle in the face of subdued global demand,” said Paul Dales, senior U.S. economist at Capital Economics.

Overall industrial production, which also includes output at utilities and mines, dropped 0.5 percent in April. That’s the biggest decline since August. Utility production plunged 3.7 percent, as power output returned to more normal levels after an unusually cold March.

A separate regional manufacturing report indicated that factory activity in the New York region shrank in May, signaling further weakness. The New York Federal Reserve Bank’s Empire State manufacturing survey fell to – 1.4 in May, down from 3.1 in April.

Still, there are signs that factory output could pick up later this year, particularly in the auto industry.

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