'US recession to last 14 months'

New York - The US economy fell into recession last spring and will contract sharply this quarter as more than 200 000 workers per month are added to the rolls of the unemployed, a survey said on Monday.

The Philadelphia Federal Reserve's latest Survey of Professional Forecasters removed some of the glow from an earlier report showing industrial output rebounded in October after hurricane disruptions produced a stunning fall in September.

Early data from the factory sector also supported the grim view of the forecasters, showing manufacturing in New York state tumbled in November to yet another record low.

Japan on Monday joined the euro zone in recession. Although the US economy contracted in third quarter, that followed two consecutive quarters of growth, albeit helped by government stimulus payments. The arbiter of US business cycles has not yet declared the economy in recession, generally defined as two consecutive quarters of contraction.

The latest data and surveys provided new evidence that turmoil in credit markets was tightening its grip over the economy, which is unlikely to seen any relief soon from the worst financial crisis since the Great Depression.

"The early signs suggest that the November data cycle is likely to be extremely weak," analysts at RDQ economics said in a research note.

The Philadelphia Fed's survey said the US economy entered a recession in April and that it will last 14 months. It predicted gross domestic product would shrink by 2.9 percent in the fourth quarter, a sharp downgrade from the previous prediction of 0.7 percent growth.

The survey predicted the economy would shed an average of 222 400 jobs per month this quarter, versus the previous forecast of a loss of 45 400 per month.

The survey said first-quarter GDP would decline by 1.1 pct and the unemployment rate would hit 7.0 percent during the first three months of next year.

- Reuters