Once a month the Federal Reserve Bank of Philadelphia releases a Business Outlook Survey. This report is conducted by surveying manufacturers in the Philadelphia Federal Reserve District which includes eastern Pennsylvania, southern New Jersey and Delaware. Despite the fact that the scope of the survey is limited to this particular region, it is often seen as an indicator of the manufacturing conditions throughout the United States.

The Philadelphia Federal Reserve in the August report, released today, stated that the current activity index dropped to -30.7 in August from 3.2 in July. This sharp decrease was due to “a deterioration in the labor market compared with July… and a continued trend of moderating price pressures.”

When the current activity index is greater than zero overall factory growth is reported to be expanding, if the index is less than zero factory activity is expected to be contracting. The last time the current activity index was below -30.7 was March 2009.

The Philadelphia Federal Reserve Business Outlook Survey is but one of many economic indicators, however it does suggest that the economic recovery that began mid 2009 could be at risk.

The index began in 1968. The chart below illustrates the current activity index since August 1969.

Data Source: Philadelphia Federal Reserve