U.S. industrial production, wholesale prices down

Industrial output in the world's largest economy tumbled in April by the most in eight months, reflecting cutbacks in U.S. manufacturing that show factories will provide little support for the economic growth. Output at U.S. factories, mines and utilities slumped 0.5% after a revised 0.3% gain in the prior month, a report from the Federal Reserve showed Wednesday. While business investment is cooling, the economy itself is projected to slow this quarter as budget cuts and tax hikes take hold.

"Things are definitely slowing," said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. "Manufacturing will bounce around the next couple of months. In the U.S., we'll have a dampening effect from the sequestration and a negative effect from the payroll tax."

In a separate report the nation's Labor Department said that wholesale prices in the U.S. dropped by the most in three years last month, reflecting a decrease in fuel costs. The producer price index, which is a leading indicator of consumer inflation, declined 0.7%, the biggest decrease since February 2010, after falling 0.6% in the prior month. However, the so-called core wholesale inflation, which does not take into consideration often-volatile food and energy prices, climbed 0.1% in the same period.