Federal Reserve Bank of Philadelphia’s general economic index unexpectedly contracted in August to its lowest level in more than a year. The index dropped to a negative 7.7 in August from positive 5.1 in July. All of the subindexes that make up the general business activity indicator showed contraction except for prices paid, adding to concerns about the sustainability of a recovery.
Philly Fed: “The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a reading of 5.1 in July to ‐7.7 in August. The index turned negative, marking a period of declining monthly activity for the first time since July 2009. Indexes for new orders and shipments also suggest a slowing this month; the new orders index fell slightly, to ‐7.1, while the shipments index turned negative, declining to ‐4.5. Indicating weakness, indexes for both delivery times and unfilled orders remained negative this month.
The percentage of firms reporting a decline in employment (23 percent) was higher than the percentage (20 percent) reporting an increase. More concerning was the significant drop in the average employee workweek index from 1.7 in July to ‐17.1 in August.”