For the ninth straight month, US manufacturing activity plummeted in June, confounding hopes of an improvement in the depressed industrial sector.

The US Federal Reserve, whose chairman Alan Green span will give a key half-yearly report on the economy today, reported that industrial production in factories, mines and utilities in the US declined by 0.7 per cent last month.

This follows a 0.5 per cent drop in May and was the sharpest decline since industrial output fell by 0.9 per cent in January. Analysts had predicted a fall of 0.5 per cent.

Despite the gloomy manufacturing news, stocks moved higher on the Dow Jones Industrial Average and the Nasdaq Composite Index yesterday as a series of deteriorating results still managed to meet or beat analysts' estimates.

Some 1,500 companies are reporting quarterly results this week and companies in the S&P 500 are expected to show a drop of 17.3 per cent in the second quarter, the worst quarterly corporate earnings performance in a decade, according to Thomson Financial/First Call.

Mr Greenspan will testify to the House of Representatives this morning and is expected to strike a cautiously optimistic note on the economy's prospects in the second half of 2001.

While manufacturing output fell in June the picture may be better in July, analysts said.