As the outlook on the economy worsened, factory activity in the U.S. Mid-Atlantic region fell to another 18-year low in November.
The Philadelphia Federal Reserve Bank said its business activity index fell to minus 39.3 from minus 37.5 in October. Any reading below zero indicates contraction in the region's manufacturing sector.
Wall Street economists had expected a reading of minus 35.0, according to a Reuters poll. Their 62 forecasts ranged from minus 45.0 to minus 24.8.
The survey of factories in eastern Pennsylvania, southern New Jersey and Delaware is scrutinized as one of the first monthly indicators of the health of U.S. manufacturing.
A similar gauge for New York state tumbled in November to yet another record low in its seven-year history, the New York Federal Reserve said on Monday.
Economic outlook worsens
The economy's health worsened in October as stocks, building permits and consumer expectations all fell, a private research group said Thursday.
The New York-based Conference Board said its monthly forecast of economic activity declined 0.8 percent in October, worse than the 0.6 percent decrease expected by economists surveyed by Thomson Reuters.
Over the last seven months, the index declined at a 4.7 percent annual rate, faster than any decline since 2001.
Most of the decline was due to the plunge in stock prices, the drop in building permits and the decline in consumer expectations, said Ian Shepherdson, an economist at High Frequency Economics.
"Overall, though, this is horrible, and it signals a clear deterioration in the economy since the summer," he said.
The index, which weighs indicators such as manufacturers' new orders and supplier deliveries, has fallen four of the last six months. It rose slightly in September, thanks to federal interventions that increased the money supply, a component of the index. October's reading also would have been worse without that increase.
The government in September unveiled a $700 billion financial rescue package, an $85 billion emergency loan to insurer American International Group Inc., and along with central banks in Europe, pumped $180 billion into money markets to increase lending between banks.
Despite the interventions, new claims for unemployment benefits jumped last week to 542,000, a 16-year high, the Labor Department said Thursday. The last time weekly claims were this high was July 1992, when the U.S. economy was emerging from a recession. The unemployment rate in October was 6.5 percent.
Companies that announced mass layoffs in the last week include Boeing Co., Pilgrim's Pride Corp., Citigroup Inc., Union Pacific Corp. and Sun Microsystems Inc.
"The economy is contracting, and the pace of contraction may intensify over the next few months," said Ken Goldstein, an economist at the Conference Board.
