US June Manufacturing Possibly Contracting Outright
In addition to an outright double dip recession in housing, US manufacturing looks as if it may very well now be contracting again. Regional manufacturing surveys from the New York and Philly regions confirm other reports of a broad reversal of fortune underway in manufacturing here in the US, specifically, as well as all around the world.
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Philly Fed: Worst Three Month Decline Ever
Today's Philadelphia Fed Business Outlook came in weaker than expected and showed the largest three month decline in the history of the index (-51.1). Above, we highlight the three-month change of the overall index as well as each subcomponent of the main index. Strangely enough, even though the headline index for current and future conditions showed its largest ever three-month decline, most of the subcomponents did not.
In the chart below, we highlight the two other periods where the Philadelphia Fed headline index declined more than 40 points over a three-month period. In 1974, the index dropped 50.5 points in three months, and in November 1981, the index dropped 43.4 points...
Federal Reserve Bank of Philadelphia
June 2011 Business Outlook Survey
Responses to the Business Outlook Survey suggest that regional manufacturing activity weakened in June. The survey’s indicators for activity and new orders turned negative this month, while indicators for shipments and employment fell but remained slightly positive. Indicators for prices show a continuing trend of moderating price pressures. The broadest indicator of future activity fell sharply in June, recording its lowest reading in 31 months.
Six-Month Indicators Fall Sharply Again
The future general activity index decreased 14 points this month and has now dropped 61 points over the last three months (see Chart). The indexes for future new orders and shipments also declined, decreasing 9 and 14 points, respectively. The index for future employment fell 17 points and has declined 32 points in the last two months. Still, slightly more firms expect to increase employment over the next six months (21 percent) than expect to decrease employment (16 percent)...
Calculated Risk
Philly Fed Survey: "Regional manufacturing activity weakened in June"
Click on graph for larger image in graph gallery.
Here is a graph comparing the regional Fed surveys and the ISM manufacturing index. The dashed green line is an average of the NY Fed (Empire State) and Philly Fed surveys through June. The ISM and total Fed surveys are through May.
This early reading suggests the ISM index could be below 50 in June - is so, this would be the lowest reading since mid-2009.