PHILADELPHIA - The Federal Reserve Bank of Philadelphia's business outlook survey, a closely watched regional economic indicator, has turned negative for the first time since December 1991.

The manufacturing-oriented survey's broadest measure of economic activity was negative 6.5 in June, compared with a positive 11.3 in May.

For June, survey respondents seeing an increase in business activity trailed those seeing a decrease by 20.6% to 27.1 %, hence the "diffusion index" of negative 6.5. Another 52.2% of respondents saw no change.

The overall general activity reading was as high as 38.8 in February.

The reading is a composite of business people's impressions of various measures of activity, including new orders, inventories, and employment.

Although reported shipments in June were somewhat higher than in May, new orders were virtually flat and manufacturing employment down.

Prices for manufactured goods were steady, and respondents expectations of future price increases had moderated considerably, according to the survey. The Philadelphia Fed said the June survey results suggest that manufacturing growth has stalled.

Peaked in February

The overall general activity diffusion index, which now stands at negative 6.5, has declined from a peak of 38.8 in February.

The reported deterioration in overall conditions stems from a recent slowing in new orders, the data suggest. Almost 52% of the reporting firms indicated no change in orders for the latest month, and the percentage of firms that reported increased new orders, 24%, matches those that reported declines.

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