US industrial production fell by 0.6 per cent in November, it emerged today, as the US Federal Reserve began a two-day meeting on whether to cut interest rates.

The Dow Jones industrial average fell 100.27 points to 8,529.41 on new data suggesting output plunged from 5.5 per cent from November last year.

The decline will put pressure on the Fed to take more drastic measures to stimulate the economy tomorrow.

Its members are meeting today and tomorrow to discuss the parlous state of the US economy. Interest rates have been slashed to 0.5 per cent already, leaving the Fed with little room to cut them further.

Industrial production rose 1.5 per cent in October, after plunging 4.1 per cent in September - the biggest one-month drop since February 1946.

Manufacturing output fell 1.4 per cent in November after gaining 0.6 per cent in October, as US carmakers were forced to reduce production by 2.8 per cent to cope with falling demand. Mining output was up 2.5 per cent, while utility output was 1.6 per cent higher.

Manufacturing output is set to fall further in the New Year as automobile manufacturers halt or reduce production further.

General Motors will temporarily close 21 factories in the US, Canada and Mexico in January to reduce first-quarter production by about 30 per cent, or 250,000 vehicles. Workers at the company’s Vauxhall factory in Merseyside have been offered nine months’ sabbatical at 30 per cent of their pay, in an effort to cut costs.

A bailout of the “Big Three” American car makers – Ford, General Motors and Chrysler – failed to make it through the Senate last week after unions refused to accept reduced pay.

Outgoing President George W Bush has said he is likely to step with money from the $700 billion Troubled Asset Relief Programme, designed to help keep America’s banks afloat, instead.

If he does not, Chrysler and General Motors, which owns Vauxhall in the UK, have said they will collapse within months.

Explore Economics

• Pre-Budget Report 2009

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive