Feel the Philly
Having accepted the V-recovery was derailed, we now have to decide if we’re muddling through with slightly lower than anticipated growth (70% chance I think) or we’re actually headed back into recession again (10% chance, perhaps, with the balance a surprise return to surging expansion).
Isolated data points can provide evidence for all three scenarios. Yesterday’s Philly Fed manufacturing survey was definitely batting for the opposition:
Manufacturing activity in the Philadelphia area has unexpectedly deteriorated in the month of August, the Federal Reserve Bank of Philadelphia revealed in a report on Thursday, with the index of regional activity unexpectedly falling into negative territory.
The Philly Fed said its diffusion index of current activity fell to a negative 7.7 in August from a positive 5.1 in July, with a negative reading indicating a contraction in manufacturing activity. With the decrease, the index turned negative for the first time since July of 2009.
I doubt any of us is investing in Philadelphia manufacturing, of course. This is canary in the coal mine stuff.
But hopefully just a blip – the future activity survey remained positive for its 20th month.
(Source: RTT News)
