Manufacturing in the U.S. mid-Atlantic region tumbled far below expectations in April.
A fuller picture of the health of U.S. manufacturing won't emerge until June 1 when the Institute for Supply Management releases its monthly national survey. But today's report from the Philadelphia Federal Reserve Bank was enough to suppress U.S. stocks and raise fears that the U.S. economic recovery may not be as steady an previously thought.
The Philly Fed index dropped to minus 5.8 from 8.5 in April, surprising economists who had a consensus forecast of a 10 point increase. The survey covers factories in eastern Pennsylvania, southern New Jersey and Delaware. The reading was the lowest since September 2011, Reuters reports.
The Philly Fed data contradicted a survey earlier in the week that showed the pace of manufacturing in New York state rebounded this month after a slowdown in April.
Thursday's news is bad for stocks but good for bonds, said Andrew Grantham, an economist with CIBC World Markets.
"While other surveys have been more positive recently (for example the Empire and ISM) today's disappointing release will still raise question marks about the sustainability of U.S. manufacturing growth in the face of external headwinds," Mr. Grantham wrote in a morning note.