Area manufacturing posts 7th straight monthly dip

Economic woes for manufacturers in the Philadelphia region continued this month, the Federal Reserve Bank of Philadelphia reported today.

Just like consumers, manufacturers are being hammered by higher costs, according to the bank's monthly Business Outlook Survey. The survey's index of prices paid by area manufacturers this month for raw materials was at its highest since November 1980, when the nation was in the midst of a previous oil-price shock.

The manufacturers' overall assessment of economic conditions declined from May and was negative for the seventh consecutive month.

"The region's manufacturing sector showed continued weakness in June: All broad indicators of activity were in negative territory and had declined from their readings in the previous month," the Fed said.

The survey covers manufacturers in eastern Pennsylvania, southern New Jersey, and Delaware. A third of those that responded said new orders fell in June. Only 21 percent reported an increase in orders. Shipments also fell.

While half of the businesses said employment was stable, 26 percent said payrolls declined.

The outlook for six months from now remained positive, though less so than in May. It has been positive for three months, after dipping into negative territory in February and March.

Separately today, a private business group in New York said its index of leading economic indicators barely moved for the second month, another sign that higher fuel and food prices, tighter credit, and a depressed housing market were stifling the U.S. economy.

The Conference Board said its economic indicators rose 0.1 percent in May. The index is designed to forecast economic activity in the next three to six months based on 10 components, including stock prices, building permits, and initial claims for unemployment benefits.

"The economy is very weak heading into the summer, with gas and utility bills possibly heading even higher," said Ken Goldstein, Conference Board economist. "But latest data suggest the economy has not fallen into a contraction and may not undergo one in the second half of the year."