Mecklai graph of the day: Adding on to Fed`s worries..

The Philly Fed Manufacturing Index is seen as one of the first monthly indicators of the health of U.S. manufacturing, which has been one of the strongest areas of the U.S. economic recovery. The survey looks at all kinds of items (employment, new orders, cost of goods, etc.) but the general headline number basically tells the story.

The below graph shows that the actuals have been mostly lower than expected then the forecast, which raises concerns that even in the month of August the actual would be on the lower side, indicating that the manufacturing sector is weakening. An aberration to the general positive data points flowing out of America in the recent weeks, with Retail Sales and m/m Industrial Production showing recovery, the outcome would be anxiously anticipated.

Manufacturing makes up 12 percent of the U.S. economy and any decline in this industry shows the economy is facing a bigger hurdle from weaker global cues. Slowing global growth momentum will certainly eat into the global demand for U.S. exports and manufacturing in particular, giving factories little reason to boost production.

The below graph shows the movement in the Philly Fed Manufacturing Index for past 7 months.

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