Manufacturing is cooling down in the Northeast, according to an August Philadelphia Federal Reserve report (link opens as PDF) released today.

The "Philly Fed" publishes the results of a monthly survey asking regional (eastern Pennsylvania, southern New Jersey, and Delaware) manufacturing stakeholders whether certain components of manufacturing have experienced growth (positive number), or contraction (negative number). Investors watch regional manufacturing reports as a possible signal of larger economic upswings or downturns.

After hitting a two-year high in July, analysts had been expecting another month of great growth. However, their predictions for a business index reading of 15 proved overly optimistic, with actual results clocking in at 9.3.

Source: Philadelphia Federal Reserve 

Although the drop was greater than expected, manufacturing growth has managed to remain in positive territory for the past three months. The all-important new orders component tapered off five points, to 5.3 for August, while shipments fell a whopping 15 points to clock in just below zero.

Looking ahead, the Philly Fed's future indicators remain positive, but less so than in July. Fifty-three percent of surveyed companies expect general business activity increases over the next six months, while just 29% expect to add on more jobs in the near future.