by Calculated Risk on 2/19/2009 10:00:00 AM

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

Conditions in the region's manufacturing sector continued to deteriorate this month, according to firms polled for the February Business Outlook Survey. All of the survey's broad indicators for current activity remained negative and fell from their already low levels in January. Employment losses were more substantial this month, and nearly half of the surveyed firms reported declines in both employment and average hours worked. Firms continued to report declines in input prices and prices for their own manufactured goods. Most of the survey's indicators of future activity improved, continuing to suggest that the region's manufacturing executives expect declines to bottom out over the next six months.

The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, declined from a reading of -24.3 in January to -41.3 this month, its lowest reading since October 1990. The index has been negative for 14 of the past 15 months ...

In special questions this month, firms were asked about their current inventory situation. Nearly 44 percent of the firms indicated that their inventories were too high and were expected to decrease during the first quarter; 67 percent said their customers' inventory plans had also decreased.

The current employment index fell for the fifth consecutive month, dropping seven points, to -45.8, its lowest reading in the history of the survey.

Click on graph for larger image in new window.

This graph shows the Philly index vs. recessions for the last 40 years.

"The index has been negative for 14 of the past 15 months, a period that corresponds to the current recession."