By Jeannine Aversa
The Associated Press

WASHINGTON - Big industry production surged by 1.1 percent in May, the strongest performance in nearly six years, and a nationwide survey of business activity showed widespread strength, fresh signs the economy possesses good momentum.

The sizable increase in industrial production reported Wednesday by the Federal Reserve came after a strong 0.8 percent rise in April. The 1.1 percent advance - better than the 0.6 percent rise some economists were expecting - represented the biggest gain since August 1998.

Factory production - the biggest slice of industrial activity tracked by the Fed - rose by 0.9 percent in May, up from a 0.7 percent increase the month before.

"They say beauty is only skin deep, but this manufacturing recovery looks better and better the deeper you look at it," said Jerry Jasinowski, president of the National Association of Manufacturers. "There is no doubt that the manufacturing recovery is durable, deep and diffuse," he said.

Output at gas and electric utilities, which increased by 1.5 percent in April, went up by 3.3 percent, reflecting unseasonably warm weather, the Fed said. Mining production, however, dipped by 0.4 percent last month, following a 0.9 percent rise.

In a second report, the Fed said economic activity continued to expand across the nation in April and May, with manufacturing, retailing, residential real-estate markets and bank lending activity faring well. The job climate also improved, with hiring increasing at a faster pace in most of the Fed's 12 regions, the report said.

Price increases for goods and services geared to consumers were generally modest, the Fed said. However, most Fed regions reported rising prices for certain materials, especially energy related products, building components and steel.

In other economic news, builders broke ground on fewer housing projects in May, but even with the decline, activity was quite brisk. Total housing permits were the highest in over three decades.