by Calculated Risk on 8/21/2008 10:30:00 AM

Here is the Philadelphia Fed Index for August activity released today: Business Outlook Survey.

The region's manufacturing sector remains weak, according to firms polled for the August Business Outlook Survey. Indexes for general activity, new orders, shipments, and employment were all negative again this month, although slightly higher than in July. Price pressures remain but were slightly less widespread compared to recent months.
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The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, increased from -16.3 in July to -12.7 this month. Despite the improvement, the index has now been negative for nine consecutive months ...

Here are a couple key point:

Manufacturing is contracting, but not getting crushed like in previous recessions. This is helping to keep the unemployment rate from rising too quickly.

Cost Pressures Showed Slight Moderation. "Almost two-thirds of firms reported higher input prices this month, but this was down from 77 percent in July. Nearly 8 percent of the firms reported lower input prices. The prices paid index decreased 18 points, to 57.5, its first decrease in four months."

Click on graph for larger image in new window.

This graph shows the Philly index vs. recessions for the last 40 years. There were a few times the index was this low without a recession - so the reading today doesn't mean the economy is in recession. However it is very likely ...