Manufacturing in mid-Atlantic slumps

U.S. mid-Atlantic factory production slumped to its lowest level since the last recession, while an index of future economic activity pointed to even tougher times ahead.

The Philadelphia Federal Reserve’s business activity index slumped to negative 24.0 this month -- the lowest since February 2001 -- from an already weak negative 20.9 in January.

The reading was worse than even the most pessimistic Wall Street forecast, and it suggested that economic deterioration was happening even more rapidly than many expected as the housing downturn continues unabated.

“This is clearly pointing to an economy that is in recession,” said Eric Green, an economist at Countrywide Financial in Calabasas.

Readings below zero represent contraction in the region’s industrial sector, which many believe could be in recession. National data have been less dire, suggesting that some regions are suffering more from the housing slump than others.

The softness was pervasive and looked to be getting worse, with the index of six-month business conditions falling to its lowest level since 1990. New orders remained in negative territory but improved to negative 10.9 from negative 15.2, although employment did turn positive after a January dip.

The Conference Board’s index of leading U.S. economic indicators fell for a fourth straight month in January, dropping 0.1% and corroborating the weakness seen elsewhere in the economy.

“Four monthly declines in a row ordinarily is taken as an indicator of a manufacturing recession,” said Pierre Ellis, a senior economist at Decision Economics in New York.

Data earlier in the day showed that the number of U.S. workers applying for jobless aid last week fell to 349,000 from an upwardly revised 358,000, but the less volatile four-week moving average of these applications stood at the highest level in more than two years, government data showed.

Economists polled by Reuters were expecting the weekly jobless claims numbers to increase slightly to a seasonally adjusted 350,000 for the week that ended Feb. 16 from the Labor Department’s earlier estimate of 348,000.

The four-week moving average, which irons out weekly fluctuations in the data, rose to 360,500 from 349,750 in the previous week, which was the highest level since October 2005 in the aftermath of Hurricane Katrina.