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Activity in the nation's factories softened in September amid a general slowing of the economy.

Industrial production

rose 0.2% in September after a revised 0.4% increase in August and a revised 0.2% decline in July, the

Federal Reserve

reported Tuesday. Originally, the Federal Reserve reported

August up 0.3% and

July up 0.4%.

At the same time the report said capacity utilization -- the portion of the nation's industrial capacity currently in use -- was an expected 82.2% in September, the same revised rate for August.

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Wall Street expected a moderation in the output of U.S. factories, and Tuesday's data is unlikely to impact either the markets or the view on interest rates. According to a poll by


, economists expected industrial production to rise 0.1%, and capacity utilization at 82.2%.

Manufacturing output increased 0.3% in September, following a 0.2% rise in August. The increase for both durable and non-durable goods was 0.3%.

The Fed said the output of business equipment increased 0.3%, a slower pace than in any previous month this year. The production of industrial equipment, which had increased about 2.9% from July to August, fell 2%.

Tuesday's data fits the widespread view that the economy is in deceleration mode, the result of six interest rate increases by the Federal Reserve over the past 16 months aimed at slowing the economy and stemming the threat of inflation.

While most recent data has suggested that the Fed's plans are on track -- which led some economists to predict an easing of rates in the months to come -- most now expect rates to be on hold at least until the end of the year. A

report released Friday that showed wholesale prices much higher than expected dashed any hopes of an imminent interest rate cut.