Shrinking factory output points to slowing economy

Toyota employee Darryl Ashley installs an inner dash silencer in a Camry on the assembly line in the Japanese automaker's manufacturing plant in Georgetown, Ky.
AP Photo/James Crisp

(CBS/AP) WASHINGTON - Manufacturing in the Philadelphia region shrank for the fourth straight month in August, adding to worries that factory output nationwide could slow.

The Federal Reserve Bank of Philadelphia says its index of regional manufacturing activity had a reading of -7.1 in August. That's only slightly better than July, when it read -12.9. Any reading below zero indicates contraction.

"The August Business Outlook Survey suggests that firms in the region's manufacturing sector are continuing to experience weaker overall activity. More firms reported declines in new orders, shipments, and employment than reported increases," the bank stated in a report. "Prices of firms' manufactured goods were near steady this month, although input prices edged slightly higher. The outlook, while not as optimistic as last month, suggests that firms still believe that activity will increase from current levels over the next six months."

The report comes after the Federal Reserve Bank of New York said Wednesday that manufacturing in that region also shrank. The two declines suggest that factory output nationwide, which rose in July, could fall in August.

In the Philly Fed report, a measure of new orders improved slightly, though still showed contraction. And an index of hiring dipped, suggesting that companies are cutting jobs this month.