US shares up as economy slows

Figures on the US economy pleased Wall Street yesterday, writes Diane Coyle. Share prices reached record levels and the dollar rebounded after earlier weakness, thanks to evidence that the economy was slowing down as predicted.

Industrial output rose 0.4 per cent in January, less than half the previous month's rise and in line with expectations. Separate figures for consumer prices showed some evidence of higher inflation, but not significantly more than had been expected.

The figures persuaded analysts that no further increase in US interest rates is likely before the Federal Reserve Board's policy committee meets in May.

The rise in output last month took it to a level 6.2 per cent higher than a year earlier. The strongest sector was business equipment, whose output was up 10.1 per cent in 12 months. Output of consumer goods grew only 3.6 per cent over the same period. Utitlities' output rebounded by 1.3 per cent in January after declining in the last quarter of 1994, although it remained 2.2 per cent down on a year ago.

The Federal Reserve said there had been a widespread slowdown in manufacturing industry. Its comments offset slight disappointment that consumer prices increased by 0.3 per cent in January, up from 0.2 per cent in December. It took the annual rate of inflation to 2.8 per cent.

The rise in "core" consumer prices, excluding food and energy, was 0.4 per cent - a sharp rise from 0.1 per cent the previous month, and taken as the first sign of rising inflation. David Bloom, US economist at James Capel, said that an increase of 0.5 per cent in services prices was particularly worrying.

Financial markets had expected higher inflation and took cheer from the Fed's comments. The Dow Jones Industrial Average was up 36.34 points at 3,994.59 at 2pm New York time, while the dollar had bounded above DM1.51.

News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Arts and Entertainment
Highs and lows of the cast's careers since 2004
News
news
New Articles
i100... with this review
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam