Will Manufacturing Lead a Labor Market Recovery?

The Federal Reserve Bank of Philadelphia reported on Thursday that manufacturing in the Third Federal Reserve District (the mid-Atlantic region) declined in February, despite the national trend towards growth. After posting a general conditions reading of -5.8 in January, the index fell to -12.5 in February, far below consensus estimates for a reading of 1.1.

The Philadelphia Business Outlook Survey asks participants to indicate the direction of change in overall business activity in a variety of areas, such as employment, working hours, new and unfilled orders, prices paid, and prices received. February’s negative Philly Fed survey posed a stark contrast to the Markit Flash PMI Manufacturing report, which showed that manufacturing across the U.S. as a whole remained strong for the month, although the rate of growth slowed.

The Philly Fed survey was broadly negative, but it did show improvement in some key areas…