Factory activity growth plummeted in the U.S. Mid-Atlantic region in June, a survey showed Thursday, adding to worries that the short and tepid U.S. economic recovery is now fizzling.
The Philadelphia Federal Reserve Bank said its business activity index dropped to 8.0 in June from May's 21.4.
Economists had expected a reading of 20.9, based on the results of a Reuters poll, which ranged from 10.0 to 24.0.
Any reading above zero indicates expansion in the region's manufacturing, so the factory sector there is still clinging to growth.
The survey, which covers factories in eastern Pennsylvania, southern New Jersey and Delaware, is seen as one of the first monthly indicators of the health of U.S. manufacturing leading up to the national report by the Institute for Supply Management, which is due next on July 1.
The Philadelphia Fed report follows a similar release on Monday that showed manufacturing growth in New York state increased slightly in June even as hiring slowed.
This supported views the factory sector is recovering but the labor market remains in rough shape.
Separately, the Conference Board, an industry research group, said on Thursday its gauge of leading indicators rose to a new peak, suggesting the U.S. economic recovery will continue.
The leading index, which tries to predict future levels of economic activity, rose 0.4 percent to a record 109.9, after stagnating in April. Analysts polled by Reuters had been looking for a slightly firmer 0.5 percent gain.
Still, the report also found economic performance is likely to soften in coming months amid persistent, and prolonged, unemployment.
"The index points to continued, though slower, U.S. growth for the rest of this year," said Bart van Ark, chief economist of the Conference Board.
Following the deepest recession in more than 70 years, the U.S. economy has bounced back with more vigor than many had expected, expanding firmly beginning in the second half of 2009.
However, this growth had yet to generate much employment.
The Conference Board found the average length of unemployment had risen to 34.4 weeks in May from around 30 at the start of the year.
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