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Huge Decline in Business Outlook: Philadephia Fed

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June 22, 2012 – Comments (0) | RELATED TICKERS: GS

The Federal Reserve Bank of Philadelphia recently released its index of regional manufacturing activity. The index, which was expected to be around 0 (signaling little contraction or expansion) instead fell sharply in June to -16.6, from a -5.8 reading in May. The Philly Fed also reported that nearly 40 percent of the firms reported declines in activity this month. 

The drastic decline in the index was one of the major reasons that led Goldman Sachs to declare a "shorts season" and recommend shorting the S&P 500.

It should be noted that the Philadelphia Fed index, by itself, is not always a reliable indicator of broader manufacturing conditions. The index is often volatile and only represents a small slice of nationwide manufacturing. 

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