WASHINGTON (AP) – Galloping energy prices, hotter industrial production and cooler housing activity are painting a mixed economic picture for Federal Reserve policymakers to ponder.

The latest batch of economic reports released Tuesday underscored the difficult crosscurrents Fed policymakers must wade through in charting the course of interest rates.

A Labor Department report showed wholesale prices jumped by 0.9 percent in April, the most in seven months. The main culprit behind the rise: soaring costs for gasoline and other energy products.

Most other prices, though, were well-behaved. “Core” prices – excluding energy and food costs – that are closely watched by the Fed edged up by just 0.1 percent for the second month in a row. That suggested the spike in energy prices hasn’t fed into price tags of lots of other products.

Global competition is forcing some U.S. companies to absorb higher prices for energy and raw materials out of their profits rather than through boosting customers’ prices, said Kenneth Beauchemin, economist at Global Insight.

For the 12 months ending in April, core prices were up 1.5 percent – a much tamer showing than the 4 percent rise in wholesale prices overall over the same period.

A Commerce Department report, meanwhile, provided further evidence that the housing market – which racked up record-high sales for five years running – is losing steam.

The number of new housing projects builders launched in April dropped by 7.4 percent to a seasonally adjusted annual rate of 1.849 million units, the lowest level in 17 months.

A third report from the Federal Reserve showed industrial activity bounded ahead last month. Production at the nation’s factories, mines and utilities rose by 0.8 percent in April, the most since December.

The report suggested that industrial activity was brisk even as producers have to cope with higher prices for energy and other raw materials.

The Fed report also showed that the proportion of industrial capacity in use climbed in April to 81.9 percent, the highest since July 2000. Economists look at this figure for clues about future inflation.

For instance, if plants were running at full tilt and couldn’t crank out enough goods to satisfy customers’ demands, that could drive prices up. For now the figure isn’t overly worrisome, but it bears close watching, analysts said.

The trio of reports gave the Fed much to sort through.

The wholesale price report suggested surging energy prices are not yet sparking broader inflation through the economy. The housing cooldown is expected to lead to slower overall economic activity, which would reduce inflation pressures. By themselves those two reports could make the Fed feel more comfortable about taking a break in its rate-raising campaign, analysts said.

But the industrial production report, by itself, would hold the door open to another rate increase, analysts observed.

“All these cross currents leave the Fed in a very difficult situation,” said Mark Zandi, chief economist at Moody’s Economy.com.

The Fed boosted interest rates last week – the 16th increase in two years – but left options for future decisions wide open. Policymakers suggested another increase might be possible or they could take a pause in their rate-raising campaign – depending upon how inflation and economic activity unfold.

Economists have mixed opinions about what the Fed will do at its next meeting in late June. Some believe the tame reading on core inflation and the weak housing report bolstered the case for the Fed leaving rates alone at that time. Others, however, pointed to the industrial production report as making the case for another bump up in rates.

The Fed will be keeping especially close tabs on how energy prices and the housing slowdown affect overall economic activity and inflation, analysts said.

Oil prices hit a record high of $75.17 a barrel in late April; they are now hovering above $70 a barrel. Those high crude oil prices have helped propel prices at the gasoline pumps to $3 a gallon in some areas.

The PPI report said energy prices surged by 4 percent in April, up from a 1.8 percent rise in March. Gasoline prices last month jumped 12.3 percent, the most since October 2004. Home heating oil costs shot up 13.7 percent, the biggest gain in six months.

“It is heartening that, so far, the feared transmission effect from higher energy prices is not taking hold,” said Oscar Gonzalez, economist at John Hancock Financial Services. “There is no guarantee, though, that this will continue.”

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On the Net:

Wholesale prices: http://www.bls.gov/

Housing Construction: http://www.commerce.gov/

Industrial production: http://www.federalreserve.gov/

AP-ES-05-16-06 1618EDT

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