Highlights
Violent contraction is a description that comes to mind when looking over the Philadelphia Federal Reserve's manufacturing report, a report together with the Empire State report that have been signaling the greatest weakness of any manufacturing data. The Philadelphia Fed's general business conditions index did improve 6 points in March but to a -35.0 level that indicates a great many more manufacturers in the region are reporting month-to-month contraction in business conditions than those reporting a gain. But that's the best of the news. Contraction in new orders deepened, down more than 10 points to -40.7 in a reading that points to greater contraction ahead for general conditions and for employment. Employment fell more than 6 points to -52.0.

Inventory destocking is becoming more urgent based on this report as the inventories index plunged more than 30 points to -55.6. And based on this report, there's no question that deflation is a major risk. Both input and output prices indicate major month-to-month price contraction, at -31.3 for prices paid and -32.6 for prices received. Manufacturers in the region also see prices continuing to contract six months from now, an early indication that deflation psychology -- that is buy it later when it costs less -- may be setting in. There was no reaction to this report, which together with the Empire State report, will raise questions whether the monthly ISM report can continue to show improvement.

Market Consensus Before Announcement
The general business conditions component of the Philadelphia Fed's business outlook survey index plunged 17 points in February to minus 41.3-which is the lowest level since minus 48.2 set in October 1990. Shipments, orders and unfilled orders also showed deterioration in the latest month, pointing to a likely weak number for March.

2009 Release Schedule

Released On: 1/15 2/19 3/19 4/16 5/21 6/18 7/16 8/20 9/17 10/15 11/19 12/17 Released For: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec