U.S. industrial output rose in July

U.S. industrial output rose 0.9 percent in July, its biggest gain since December, the Federal Reserve said on Tuesday. It was the latest in a string of reports that indicated that the economy, which had grown at the anemic annual rate of just 0.8 percent in the first half of the year, might be showing new signs of life. Also in July, consumers spent more and home building declined less than expected.

“This is another indicator that this sector has dug its way out of the Great Recession hole," Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pa., told Reuters. "It's hard to think we are on the eve of destruction when manufacturers are ramping up production."

Industrial output is the production of the nation’s utilities, factories and mines. In July, heat waves across America pushed up energy demand, which boosted utilities’ production. Factory output rose 0.6 percent as the auto sector resumed getting all the parts it needs from Japan after Japan’s March 11 earthquake disrupted supply chains earlier in the year. The auto industry accounted for nearly all the increase in factory production, USA Today reports. Production of motor vehicles and parts surged 5.2 percent.

According to MarketWatch, capacity utilization — a measure of slack in the economy — also rose, to its highest level since August 2008. It was 77.5% in July, up from 76.9% in June.

Output by factories, mines and utilities has risen nearly 13 percent since a recession low in June 2009, USA Today reports. But it remains about 6.5 percent lower than the pre-recession peak it hit in September 2007.

In spite of the good news, U.S. financial markets ignored the U.S. data, instead focusing on reports that Germany's economic growth sputtered in the second quarter, Reuters reports. All three major markets closed lower on Tuesday. The Dow Jones industrial average dipped 77 points, or 0.67 percent, to end at 11,406. The S&P 500 lost 11.7 points, or 0.97 percent, to finish at 1,193. And the Nasdaq Composite fell 31.8 points, or 1.2 percent, to 2,523.