U.S. industrial production rose at its quickest pace in seven months in July as motor vehicle output rebounded strongly, further easing fears the economy could slide into recession.

    Other data showed residential construction, while still depressed, was not a drag on the economy as the second half of the year got under way.

    Industrial output increased 0.9 percent, the Federal Reserve said Tuesday, after a 0.4 percent gain in June and well above economists’ expectations for a 0.5 percent rise. Manufacturing, which has been the economy’s main pillar of support, rose 0.6 percent as motor vehicles production surged 5.2 percent after falling 0.9 percent in June.

    “This report suggests that the recovery may have regained some momentum in recent months, and it could go some way in easing fears of an impending recession,” said Millan Mulraine, senior macro strategist at TD Securities in New York.

    The economy barely grew in the first half of the year, held back by high gasoline prices and supply chain disruptions from Japan in the wake of the March earthquake. The industrial production data indicated the Japan-induced disruptions to manufacturing were fading.

    Commerce Department data showed housing starts slipped a less-than-expected 1.5 percent in July to a seasonally adjusted annual rate of 604,000 units as builders broke ground on new multifamily units to meet demand for rental apartments. Economists had expected a 600,000 rate.

    However, the housing market recovery continues to be hobbled by an oversupply of previously owned homes.(SD-Agencies)