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Tuesday, 16 October, 2001, 14:40 GMT 15:40 UK
US industry slump longest for 50 years
Ford production line
US industry is running at its lowest capacity for 18 years
US industry is undergoing its longest slump since World War II, official figures have confirmed.

Output at US factories, utilities and mines slid 1% last month, data from the country's central bank, the Federal Reserve, showed.

The fall represented the 12th successive monthly decline, the longest since a series of decreases extending from November 1944 to October 1945.

The report also revealed that US industry was running at 75.5% capacity, the lowest level for 18 years.

'Really weak'

The data, which followed a speech by a Fed chief warning of uncertainty surrounding a US economic recovery, was more gloomy than Wall Street had forecast.

The headline figure was branded "really weak", by Carey Leahey, senior US economist with Deutsche Bank Securities, who forecast that US industry may yet report further output falls.

"I do not see any light in the tunnel for the manufacturing sector with the dollar strong and global demand continuing to unravel," he said.

"But one can argue that you probably will not see many more 1.0% drops in a single month."

Utilities were among the worst performing firms included in Tuesday's survey, reporting output down 1.8% last month.

Mining firms showed greater resilience, recording a 0.3% production rise.

Fed warning

Also on Tuesday, Roger Ferguson, Fed vice chairman, warned that last month's terror attacks had left it difficult to predict when the beleaguered US economy might show signs of recovery.

"If the extent of the economic damage inflicted by the attacks is unknown at this point, so too is the length of time before aggregate economic growth picks up," Mr Ferguson told a Bond Market Association conference.

"Many private sector economists are forecasting a brief decline in economic activity during the second half of this year, followed by a recovery early next year.

"Whether this outlook becomes reality depends importantly on... household and business confidence."

But Mr Ferguson predicted the eventual return of economic growth.

"Our flexible markets, entrepreneurial spirit, and well-educated workforce, and more recently major advances in information technology, bode well for the long-term growth of productivity, employment, and standards of living."

The warning followed a drive by US policymakers to draw up measures for supporting the economy.


Terror's impact

Signs of a slowdown

Rate cuts

Analysis

Key players

FULL SPECIAL REPORT
See also:

12 Oct 01 | Business
US retail sales plunge
08 Oct 01 | Business
Retaliation may hinder US economy
03 Oct 01 | World
Bush package to boost economy
26 Sep 01 | Business
US economy in freefall
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