U.S. industrial output posts biggest fall in 34 years

WASHINGTON (Reuters) - U.S. industrial production fell a sharp 2.8 percent in September, the biggest decline since December 1974, according to a report on Thursday that was likely to reinforce fears of a recession.

Economists had expected a decline of 0.8 percent, after a revised 1 percent decline in August, initially reported as a 1.1 percent fall.

The Federal Reserve said in the report the September drop was exacerbated by Hurricanes Gustav and Ike, as well as a strike at aircraft maker Boeing. Business equipment production was off 7 percent, while consumer goods were down 1.4 percent.

For the third quarter as a whole, industrial production decreased at an annual rate of 6 percent.

Economists were already warning that the economy may have contracted in the third quarter after surprisingly weak September retail sales.

(Reporting by Emily Kaiser; Editing by Neil Stempleman