2010.08.1911:06:00UTC+00Philly Fed Index Unexpectedly Turns Negative In August

Manufacturing activity in the Philadelphia area has unexpectedly deteriorated in the month of August, the Federal Reserve Bank of Philadelphia revealed in a report on Thursday, with the index of regional activity unexpectedly falling into negative territory.

The Philly Fed said its diffusion index of current activity fell to a negative 7.7 in August from a positive 5.1 in July, with a negative reading indicating a contraction in manufacturing activity. The steep drop came as a big surprise to economists, who had expected the index to rise to a reading of 7.5.

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