US industry saw more signs of recovery yesterday, according to official data, although the overall picture is still of an economy in the doldrums.

The Federal Reserve said output from US factories, mines and utilities fell only 0.1 per cent in January after declining 0.3 per cent in December. Beyond July's 0.1 per cent increase, it was the smallest drop in industrial output since the slump began in October 2000. The figures, following earlier reports of shrinking inventories, support hopes for an economic rebound. But US wholesale prices fell at the fastest annual pace in 50 years amid persistently high levels of under-used production capacity, and a key consumer-confidence measure fell for the first time in four months. Figures from the Labour Department showed that while wholesale prices rose by 0.1 per cent in January, they had fallen a cumulative 2.6 per cent in the year to January, the biggest 12-month drop in half a century. Federal Reserve policymakers, in minutes from their December 11th meeting, dismissed the risk of a "deflationary spiral" as "very limited, given the economy's self-correcting resilience" and earlier stimulus measures.