Philly Fed Index Posts First Contraction of 2002

Manufacturing activity in the Philadelphia-area contracted in August, for the first time since December, lending more fuel to fears that the stalled recovery is turning into a double-dip recession, Bloomberg reported.

When manufacturing slumps, trucking companies that carry goods to and from factories are often hurt as well.

The Federal Reserve Bank of Philadelphia’s general economic index, a measure of manufacturing activity in eastern Pennsylvania, southern New Jersey and Delaware, fell to –3.1 in August, after a 6.6 reading in July and 22.2, the year’s high point, in June.

The new orders index fell to –2.7 in August from 6.6 last month, while the shipments index dropped to -3.3 from 4.6 in July.

“Expectations for growth also diminished in August, although manufacturing executives continue to be optimistic about conditions for the next six months,” the report said

Observers had expected the index to rise to 8, Bloomberg said.

In a conflicting report, the Federal Reserve Bank of New York said its Empire State manufacturing index, measuring activity in New York state rose to 5.9 in August from –4.4 in July.

The New York Fed said its survey “points to an improvement in New York's business conditions, with its “indexes for new orders and shipments positive, “as was the index for prices paid.”

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