US industrial output rose in December as manufacturing rebounded at its strongest pace in a year, further evidence the economy ended 2011 on a firmer footing.

Other data today showed inflation pressures remained in check, with wholesale prices slipping last month, which should give the Federal Reserve room to respond to an anticipated slowdown in growth in the first half of this year.

Industrial production increased 0.4 per cent last month, the Federal Reserve said, after falling 0.3 per cent in November.Economists had expected industrial output to rise 0.5 percent.

Separately the Labor Department said its seasonally adjusted index for prices received by farms, factories and refineries fell 0.1 per cent.

Excluding volatile food and energy, core producer prices rose 0.3 per cent last month, fueled by a big gain in prices for light motor trucks. It was the biggest rise since July and above economists' expectations for a 0.1 per cent gain.

The industrial output report indicated the production side of the economy ended the year on a firmer footing, with manufacturing output rising 0.9 per cent after contracting 0.4 per cent in November.

For the fourth quarter as a whole, industrial output rose at an annual rate of 3.1 per cent, increasing for the 10th consecutive quarter.

Energy costs for businesses fell 0.8 per cent last month, with gasoline down 2.3 per cent. Food prices fell 0.8 per cent.That brought the 12-month reading for producer price inflation down to 4.8 per cent, a bigger drop than expected after coming in at 5.7 per cent in November.

Reuters