US industry has been in recession for longer than at any time since the Great Depression of the 1930s, according to official figures for last month published yesterday.

Other figures yesterday showed that on one measure, retail prices fell at the fastest rate in 15 years thanks to a sharp drop in energy prices.

The reports underscored the weakness of the US and global economies and provided evidence for the handful of US economists who believe there is a threat of deflation and a cycle of falling prices, profits, production and employment such as that which afflicted America in the 1930s and Japan for much of the 1990s.

The US Federal Reserve said output from US factories, mines and utilities fell by a seasonally adjusted 1.1 per cent in October, following a 1 per cent decline in September.

While the fall is nowhere near as steep as the 50 per cent drop in output witnessed from 1929 to 1932, industrial output has shrunk for 13 consecutive months, unmatched since the 1930s, for a total fall of 6.5 per cent.

Industry operated at a rate 25.2 per cent below its potential in October, the highest level of capacity under-utilisation since 1983. The decline was the most widespread since 1980.

The Labor Department said its consumer price index fell a seasonally adjusted 0.3 per cent - the biggest decline since March 1986 - led by a 10.7 per cent drop in the price of petrol.

The erosion in output partly reflected temporary disruptions leading from the September 11th attacks. On prices, the decline in the CPI was only slightly greater than the 0.28 per cent drop in July.

Excluding food and energy prices, which are volatile, the CPI rose about 0.2 per cent for the fourth consecutive month.

The absence of an immediate inflation threat is widely expected to encourage more cuts in short-term interest rates.