After a mixed New York Fed report on Wednesday, Thursday brought a soft economic report from the Federal Reserve Bank of Philadelphia. The so-called Philly Fed was reported as 5.7 for the month of July. Bloomberg had the consensus at 12.0, and their range of economist projections was 9.0 to 18.9. In short, the Philly Fed missed on every single expectation.

Another issue is that this means the jump to 15.2 in the month June was really just an outlier report. New Orders were up with a reading of 7.1, but that was still lower than June.

Shipments in the Philly Fed District fell to 4.4 in July from 14.3 in June. The backlog orders went into a contraction, falling to -6.3 in July from a gain of 3.7 in June. Another dismal part of the report was that the Employment Index component also went into contraction, down to -0.4 in July from a gain of 3.8 in June.

What investors have to consider here is that this was really only one small report, but the regional report now only has one strong reading for all of 2015 in the regional manufacturing sector. Still, this is also in line with other regional reports. That strong dollar is hurting exports, and that is becoming more and more undeniable on most accounts.

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The official statement from the Philadelphia Federal Reserve represented the overall report as follows:

Indicators for general activity, new orders, and shipments remained positive, although they declined from their readings in June. Employment was essentially flat at the reporting firms this month. Firms reported higher prices for raw materials and other inputs in July, but prices of manufactured goods were reported as mostly steady. The survey’s index of future activity improved slightly, however, indicating that firms expect continuing growth in the manufacturing sector over the next six months.

While the equity markets were off of highs, the S&P 500 was still up 11 points and the Dow Jones Industrial Average was still up about 40 points on last look.

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