Philadelphia Fed data point to recession

Read: U.S. sees stagnant jobs market, rising inflation

If you look at the manufacturing numbers in the Atlantic states, the U.S. is likely already in a recession. So suggest data in the latest business activity survey conducted by the Federal Reserve Bank of Philadelphia.

The report, components of which are folded into the Federal Reserve’s quarterly Beige Book report on U.S. economic activity, found manufacturing activity in the region dropped significantly in August.

The survey’s broad indicators for manufacturing activity, shipments, and new orders all fell sharply compared with July and companies said employment levels and average work hours were lower. Price indexes also slipped, but firms said they still expect overall growth in shipments, new orders, and employment during the coming six months.

The worst news, though, came from the broad measure—called the diffusion index of current activity—which fell from a low positive reading of 3.2 in the July survey to -30.7 in August. That places the index at its lowest level since March 2009. Demand for manufactured goods tracked the general index, falling 27 points, and the current shipments index fell 18 points.

Taken together, these declines suggest overall weakening of economic activity. In fact, the last time the index slipped this low, the U.S. was already in recession. And this has led economists and trend watchers to speculate that a period of negative economic growth is likely already underway.

More credence to that theory was contained the Philly Fed’s report, which found outlook for future activity fell 22 points in August, more than erasing the 21 point jump people were crowing about back in July. Indexes for future new orders and shipments, meanwhile, dropped 12 and 10 point each, and indexes for future employment continue to track below average.