Jun 16, 2005

Philly Red Index

From Marketwatch:

Manufacturing in the Philadelphia region weakened unexpectedly in June, the Federal Reserve Bank of Philadelphia reported Thursday.

The Philly Fed's activity index fell to -2.2 in June from 7.3 in May.

This is the first negative reading since May 2003.

The drop was unexpected. Economists were expecting a slight increase to 9.4, according to a survey conducted by MarketWatch. See Economic Calendar.

Treasury prices reversed direction and moved higher after the report was released. Treasurys improve on weak Philly Fed data.

The index has been positive for two straight years. Readings over zero indicate expansion in the sector

In May, the index fell to 7.3 from 25.3, the largest one-month decline since January 2001.

The decline in the Philly Fed index contrasted with a rebound in the Empire State index in June and a strong gain in industrial production in May. See full story.

This is the kind of trend I was envisioning when I first thought the Fed might be done soon. As the story says this report is not consistent with May's production numbers.

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