The outlook for the US recession is growing more discouraging every day. Adding to the morose forecast leading indicators on manufacturing activity in the Philadelphia region and a composite gauge used to project growth over the coming three to six months both tumbled more than expected. The most influential report is no doubt the Conference Boards leading economic indicators gauge. As a barometer for growth in the near future a 0.8 percent decline doesn't mark a significant historical record (there was a 0.9 percent contraction in August); but it does mark the worst series of readings from the report since the late 80's, early 90's. This essentially sizes up the uncoming recession. Questions of how long the slump will last and how prevasive it will be are the primary drivers for speculation over the short-term. A few interesting highlights from this month's figure, consumer goods orders, capital goods orders and jobless claims components were all little changed while the stock component plunged. However, with consumer confidence tumbling, the resiliency of these sub gauges will fall through as the recession deepens.
As for the Philly Manufacturing Index, the market is already well aware that national factory activity is at its lowest level since 2001. On the other hand, as both foreign and domestic demand contract, much more significant records could be plunged. The Philly reading certainly supports a sustained drop in output across the country. This regional report hit its lowest reading in 18 years with October's reading; and all the components were under water. Gauges for prices recieved, new orders, shipments and employment all tumbled. There was a significant drop in prices paid, but this reading certainly cannot compensate for the absence of demand. As for managers' forecasts, conditions are only expected to worsen over the coming six months. With new orders, capital expenditures and employment projected to fall, this sector of the economy will certainly be a significant burden to growth going forward.