Highlights
An eye popping minus 30.7 headlines a troubling manufacturing report from the Philly Fed. The reading indicates very significant month-to-month contraction in general business conditions for August, one consistent with a shock and one compared against a small gain of 3.2 in July. But the report cites no particular factors behind the contraction, contraction that's evident throughout the details of the report.

New orders fell to minus 26.8 from plus 0.1, shipments minus 13.9 from plus 4.3, number of employees minus 5.2 vs plus 8.9, unfilled orders minus 20.9 vs an already dismal minus 16.3. Price data show a contraction for output prices and a much slower rate of inflation for input prices. Delivery times improved significantly which is another sign of weakness.

The six-month outlook also crumbled, coming in above zero but just barely at 1.4 vs July's 23.7. The Empire State report, released Monday and covering the New York manufacturing economy, also showed contraction but at a much less severe rate. Next week and the week following eyes will be on a run of other regional indicators to see if the outlook for the national manufacturing economy has suddenly taken a turn for the worse.

Market Consensus before announcement
The general business conditions index of the Philadelphia Fed's Business Outlook Survey improved to 3.2 for July, only a bit above break-even zero to indicate very slight growth compared to June. But this was better than June's reading of minus 7.7 and was in line with the soft reading in May of 3.9. Basically, overall conditions are improving marginally after a dip in June. But forward momentum is flat instead of gaining strength. New orders posted at 0.1, compared to June's depressed level of minus 7.6 that indicated contraction. Backlogs, at minus 16.3 for a second month, show significant contraction. Nonetheless, plant managers appear to be a little optimistic about improving conditions as hiring picked up a bit this month.

2011 Release Schedule

Released On: 1/20 2/17 3/17 4/21 5/19 6/16 7/21 8/18 9/15 10/20 11/17 12/15 Release For: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec