US industrial output sees sharpest fall

WASHINGTON: The US economic downturn deepened as the credit crisis intensified, reports showed on Thursday. Industrial output fell 6% in the third quarter, the most since 1991, and a factory index for the Philadelphia region hit an 18-year low this month, Federal Reserve figures showed on Thursday. The Labour Department reported that for the first time in two years consumer prices didn���t increase for two straight months.

The numbers give the Fed scope to lower interest rates again this month. Stocks slid and interest-rate futures showed rising expectations of a half-point cut in the Fed's benchmark to 1%.

���The credit crunch is intensifying, and enough damage has been done to ensure the next couple of quarters will be much weaker,��� said James O'Sullivan, a senior economist at UBS Securities in Stamford, Connecticut. ���The pendulum has swung sharply to the downside risks to growth rather than inflation.���

Shutdowns caused by hurricanes and a Boeing Co. strike caused production at U.S. factories, mines and utilities last month to decline 2.8 percent, the most since 1974, after a 1 percent drop. The median forecast of 73 economists surveyed by Bloomberg News was for a 0.8 percent fall