June 16 (Bloomberg) -- U.S. industrial production increased 1.1 percent in May, the most in almost six years...

The rise in production at the nation's factories, mines and utilities last month followed a 0.8 percent increase in April, the Fed said in Washington. The proportion of industrial capacity in use rose to 77.8 percent, the highest since May 2001, from 77.1 percent.

Industrial production is up 6.3 percent from May of last year, the biggest 12-month increase since a 7 percent gain in the year ended May 1998. With inventories at record lows relative to sales, production and employment are likely to keep growing and give the economy a boost, economists said.

``Accelerated business investment and the rebound in manufacturing is the big story in 2004,'' said Tim Rogers, chief economist at Briefing.com, a Boston-based forecasting firm, before the report. ``Consumers carried the economy at the start of the recovery and businesses are the drivers right now.''

Manufacturing employment last month rose the most in almost six years, the latest Labor Department statistics showed, as sales improved and businesses tried to speed assembly lines to keep up with demand.

Work at factories, which accounts for almost 90 percent of industrial production, rose 0.9 percent last month, the most since February, after rising 0.7 percent in April. Production of electronics increased 5.1 percent and was 31.6 percent higher than in May 2003.

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Businesses in April had enough goods in stock to satisfy 1.3 months' worth of sales at their current pace, matching the March figure as the lowest on record, a Commerce Department report showed yesterday.

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