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August Philly Fed index negative for fourth month

WASHINGTON (MarketWatch) -- A measure of Philadelphia-area manufacturing was negative for a fourth month running, according to data released Thursday showing the continued worries industry insiders have in one of the leading indicators for the broader economy.

The Philadelphia Fed's manufacturing index had a negative 7.1 reading, which marks a slight improvement from July's negative 12.9 reading but which came in below a MarketWatch-compiled economist survey calling for a negative 5.0 reading.

The data, based on surveys conducted through Tuesday, saw negative readings across pretty much all categories: new orders, shipments, unfilled orders, delivery times, inventories, number of employees and average employee workweek.

Only prices paid and prices received were positive and both saw gains, an indicator of incoming commodity price gains and a slight move by companies to pass those on.

On Wednesday, the New York Fed reported a similarly negative reading for New York-area manufacturers.See Empire State story.

Both gauges are diffusion indexes, which means they subtract the percentage of people reporting a drop in activity from those who report an increase.

The indexes are more an indication of slowing manufacturing activity growth than actual outright declines. For instance, U.S. industrial production in May, June and July saw monthly gains, though the annual growth rate of 4.4% in July has slowed from the 2012 high of 5.15% in February.

"However, with jobless claims moving lower, signs of modest recovery in housing, and a pickup in retail sales in July, we do not think that these survey reports are pointing to a deterioration in overall economic conditions," said analysts at RDQ Economics.

"With long lead times for adding plant and machinery, we believe that these survey reports are being influenced by concerns about overseas economic conditions and uncertainty over the tax regime for 2013."

Elsewhere, the Labor Department reported little change in initial jobless claims while the Commerce Department reported a small drop in housing starts in July. Read housing starts story.