WASHINGTON (AFX) - US indicators to be released this week will show that industrial output will continue its upturn after an extended slump, although the economy has yet to show stronger signs of growth that would spur the Federal Reserve to begin raising rates, economists said. "The manufacturing sector is decidedly in an upswing as the inventory rebuilding process kicked in forcefully in the first quarter," said Anthony Karydakis of Banc One Capital Markets in Chicago. A consensus of economists expect industrial output to rise 0.6 pct from the prior month, which Ethan Harris of Lehman Brothers in Connecticut said is "one more sign that recovery in industrial activity is underway." On Wednesday, Federal Reserve Board Chairman Alan Greenspan is expected to tell lawmakers on Capitol Hill that the economy is solidly on track for recovery but not yet strong enough to begin raising interest rates. "Mr. Greenspan will confirm the obvious -- an economic recovery is well underway -- but we do not think he is ready to go to the next level and signal the start of a tightening cycle," Harris said. Banc of America Capital Management's Lynn Reaser echoed those sentiments. "Look for industrial production to post a solid gain for the third consecutive month in March," Reaser said, adding she expects Greenspan "to present a relatively balanced economic outlook, suggesting the need for the Federal Reserve to raise interest rates eventually, although not in the immediate future." Economists do not expect a smooth and sustained increase as the economy makes a transition from inventory-led to demand-led growth. "We don't expect the infamous double-dip recession absent some major economic shock, but we do expect a noticeably bumpy ride on the road through recovery," said Geoffrey Somes of FleetBoston Financial in Massachusetts. Recent tensions in the Middle East and Venezuela have brought further uncertainty to the oil markets and increased inflation fears, which have remained on the back burner for more than a year. "The risk of a sharp further rise in oil prices later this year is not negligible as evidenced by the emergence of a large war risk premium in recent weeks," said Bill Dudley of Goldman Sachs in New York. Banc One's Karydakis said the expected decline in housing starts is simply a reflection of the unusual growth in recent months. "The decline should be viewed as simply a payback for the exceptional strength of the weather-aided February number and it will do nothing to change the picture of the robust housing market," Karydakis said. Thursday's survey of business activity from the Philadelphia Fed is expected to show a fourth consecutive monthly increase after more than a year of negative figures. "We look for the Philadelphia Fed's Business Outlook survey to post modest gains this month, consistent with the improvement seen in all the national manufacturing data since year-end," said Harris. Following are the consensus forecasts of Wall Street economists for data to be released this week: FEBRUARY BUSINESS INVENTORIES, Monday (8.30 am): Economists said business inventories fell 0.2 pct in February after they rose 0.2 pct in January. MARCH CONSUMER PRICE INDEX, Tuesday (8.30 am): Economists forecast that consumer prices rose 0.5 pct in March after increasing 0.2 pct in February. The core rate, which excludes volatile food and energy prices, is seen rising 0.2 pct after it rose 0.3 pct in February. MARCH HOUSING STARTS, Tuesday (8.30 am): Economists forecast that housing starts fell 3.5 pct in March to 1.71 mln units from 1.77 mln units in February. MARCH INDUSTRIAL PRODUCTION, Tuesday (9.15 am): Economists said industrial output increased 0.6 pct in March after rising 0.4 pct in February. An increase would mark the third consecutive increase in industrial production. Utilisation is seen rising to 75.1 pct of capacity in March from 74.8 pct in February. FEBRUARY TRADE BALANCE, Wednesday (8.30 am): Economists forecast that that the US trade deficit widened to 29.1 bln usd from 28.5 bn usd in January. GREENSPAN CONGRESSIONAL TESTIMONY, Wednesday (10.00 am): Federal Reserve Board Chairman Alan Greenspan is expected to articulate a "wait-and-see" attitude toward raising interest rates in regularly scheduled remarks to the Joint Economic Committee of Congress. WEEKLY JOBLESS CLAIMS, Thursday (8.30 am): Forecasts indicate that initial claims for regular state unemployment benefits fell by 28,000 to a seasonally adjusted 410,000 for the week ended April 13 after claims fell 55,000 to 438,000 in the prior week. MARCH LEADING INDICATORS, Thursday (10.00 am): Economists said the Conference Board's Composite Index of Leading Indicators will rise 0.3 pct after it rose 0.6 pct in February. APRIL PHILADELPHIA FED SURVEY, Thursday (12.00 pm): Forecasts indicate that the Philadelphia Fed business activity index rose to 14.1 in April from 11.4 in March. A rise in the survey would mark the fourth straight monthly increase after 13 negative readings. A reading above zero indicates economic expansion.