Manufacturing in the Philadelphia region unexpectedly shrank in August for the first time in a year as orders and sales slumped, a sign factories are being hurt by the U.S. economic slowdown.
The Federal Reserve Bank of Philadelphia’s general economic index fell to minus 7.7 this month, the lowest reading since July 2009, from 5.1 in July. Readings less than zero signal contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware.
Manufacturing is slowing after leading the economy out of the worst recession in seven decades as consumers rein in spending. With factory growth waning and companies slow to add employees, the economic expansion will slow in the second half of the year.
“It’s not a pretty picture,” said Raymond Stone, chief economist at Stone & McCarthy Research Associates in Skillman, New Jersey, who forecast a reading of minus 6. “We’ll see continued gains in manufacturing output, but it might be very small.”
Source: Philly Fed