* U.S. industrial output up 0.2 percent in August
* New York state manufacturing index falls in September
* Import prices up 0.6 percent in August (Recasts with details, adds byline, background)
By Lucia Mutikani and Emily Kaiser
WASHINGTON, Sept 15 (Reuters) - U.S. industrial output slowed last month and a regional measure of factory activity touched a 14-month low in September, pointing to a cooling in manufacturing as the boost from an inventory build-up fades.
The reports on Wednesday were consistent with other data suggesting the U.S. economy is stuck in a soft spot, but they also showed the manufacturing sector continued to expand and offered nothing to suggest a new recession was brewing.
"We have a sharp slowdown, but that doesn't look like it's going to develop into an outright collapse," said Paul Ashworth, senior U.S. economist at Capital Economics in Toronto.
Industrial production rose 0.2 percent in August, Federal Reserve data showed, matching economists' forecasts for a sharp slowdown from July when unusually strong auto manufacturing lifted output. July's gain was revised down to 0.6 percent from 1 percent.
Excluding motor vehicles and parts, total industry output increased 0.4 percent in August, compared with July's 0.3 percent advance.
Separately, the New York Fed's "Empire State" general business conditions index slipped to 4.14 in September from 7.10 in August. September's reading marked the lowest since July 2009 and was below market expectations for 8.0.
Any reading above zero in the index, which economists look to for early clues on national output, indicates expansion.
Graphic on U.S. industrial production:
http://link.reuters.com/mut73p
Graphic on NY manufacturing:
http://link.reuters.com/pen73p
Markets largely ignored the reports, focusing instead on developments in the foreign exchange markets following Japan's intervention to sell the yen for the first time in six years.
The U.S. dollar jumped from a 15-year low against the yen, while government debt prices rose in anticipation that Japanese authorities would reinvest their dollar purchases back into U.S. Treasuries. Stock prices were little changed on the day.
INVENTORY BOOST FADING
Manufacturing has led the economy's recovery from its worst recession in 70 years as businesses rebuilt inventories, which had been cut to record lows to cope with weak demand. But the lift from inventories is now fading.
The Federal Reserve meets next Tuesday to assess the economy and ponder whether more stimulus is needed. Most analysts expect the Fed to renew its promise to keep its balance sheet from shrinking, and thus avoid a de facto tightening, but not to announce any news steps to ease monetary policy.
While the Empire State headline figure was disappointing, the closely watched new orders index rebounded from negative terrain, while employment and shipment measures improved from August.
Details in the report on overall U.S. industrial output in August were also mixed, with mining production jumping 1.2 percent and utilities surprising with a 1.5 percent drop.
"Continued broad-based growth in manufacturing is an encouraging sign and consistent with our view that while the recovery has shifted to a lower growth phase, the chances of a double-dip recession remain slim," said Peter Newland, an economist at Barclays Capital in New York.
Capacity utilization, a measure of slack in the economy, rose modestly to 74.7 percent, a rate 4.7 percentage points above the year-ago level but 5.9 points below the 1972-to-2009 average.
A third report from the Labor Department showed import prices increased 0.6 percent in August after rising 0.1 percent in July. Markets had expected a 0.3 percent gain.
Prices were driven by a 2.1 percent rise in the cost of imported petroleum.
Excluding petroleum, import prices rose 0.2 percent, reversing the prior month's 0.2 percent decline.
Analysts said the firmer import prices reduced the chances of the economy slipping into deflation, an economically disabling, broad-based decline in consumer prices.
"It's a sign that the deflationary pressure isn't quite as strong as we were worried about a few months ago," said Capital Economic's Ashworth.
The report showed export prices rebounded 0.8 percent last month after slipping 0.2 percent in July. Export prices were boosted by a 4.3 percent jump in food prices, the biggest rise in 14 months. (Editing by Andrea Ricci)