PhillyDeals: Philadelphia Fed report reflects poorly on region

Thursday's monthly manufacturing report from the

Federal Reserve Bank of Philadelphia

, which surveyed factory owners in Eastern Pennsylvania, South Jersey, and Delaware, is the latest scare news for the nervous international business-watchers' fraternity.

It's "a nightmare index" report that looks a lot worse than economists expected, a Reuters story reported.

Factory activity "has dipped significantly," the Fed says. "Shipments and new orders" have "declined sharply from last month," labor hours and customer orders are down, "future activity weakened markedly."

The good news: Low demand means low prices - and factory operators are still optimistic, expecting "growth in shipment, new orders, and employment over the next six months."

The survey in July had said manufacturing was growing, though not by much. This time, a lot more manufacturers said business had slowed, compared with those who said they gained clients and orders.

So why so glum in August? "This month's survey ran from Aug. 8 to 16, overlapping a week of unusually high volatility in both domestic and international financial markets," the Fed says.

The Fed heard from 76 manufacturers in its survey - fewer than the usual 85 to 90 respondents.

And what are we measuring, really? "What does the Philly index even mean? Does Philadelphia even exist anymore?" groaned an unnamed "London economics editor," Reuters said.

Yes, England, we're still here, six million people, probably stronger than your Manchester or Birmingham. Still a manufacturing center, with our Merck pill factories and DuPont and Dow chemical plants and Sunoco oil refineries and Boeing and Lockheed military aircraft installations, each employing thousands.

The Fed hints the problem isn't here, but in the financial markets, which have been roiled by Washington and European financial politics - including the new Republican presidential front-runner, mouthy Texas Gov. Rick Perry, who is threatening the independence of the Federal Reserve, as though we could trust him and Congress to make things better. Philly manufacturers are betting this is a temporary problem that will be better in six months.

A daily riff on the people, companies, deals, market-movers, dreams, and whispers driving regional commerce. Read Joseph N. DiStefano's daily blog at www.philly.com/phillydealsEndText