Philly Fed Indexes Suggest Recession is Ending

PHILADELPHIA FED -- The region's manufacturing sector is showing some signs of stabilizing, according to firms polled for this month's Business Outlook Survey. Indexes for general activity, new orders, and shipments all registered slightly positive readings this month. Although firms reported continued declines in employment and work hours this month, losses were not as widespread. Most of the survey's broad indicators of future activity continued to suggest that the region's manufacturing executives expect business activity to increase over the next six months.

The survey's broadest measure of manufacturing conditions, the diffusion Index of Current Activity, increased from -7.5 in July to 4.2 this month. This is the highest reading of the index since November 2007 (see chart above).

Indicators of future activity improved slightly this month and continued to suggest that firms are expecting better conditions over the next six months. The Future General Activity Index remained positive for the eighth consecutive month and increased from 51.9 in July to 56.8 (see chart above).

MP: Notice in the chart above that the levels and trends of both the Current Activity Index and the Future Activity Index in August are looking very much like both of the indexes at the end of the 2001 recession.

Originally posted at Carpe Diem.