Historic Collapse In Philly Fed Which Prints At -7.7 On Expectations Of 7.0, Weakest Since July Of 2009, Biggest 3 Month Drop Ever

As we predicted following yesterday's disastrous New York Fed, we get the second confirmation that the economy is now contracting, courtesy of the Philly Fed, which just printed at negative 7.7 on expectations of 7.0%. This is the lowest number since July of 2009, and is the biggest three month collapse in the history of the series, plunging from 43.4 in March to -7.7 in June, or an over 50 point drop in three months. As expected, the Fed is telegraphing that the economy is collapsing and that stocks needs to plunge another 20% before Operation Twist (QE3) is given a green light. And make no mistake: the downside 3 month momentum in the series at -51.10 is the worst ever: all those buying stocks in advance of more easing are completely forgetting that they will take major losses before the market is low enough to allow actual easing to proceed.

From the report:

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from 3.9 in May to ?7.7, its first negative reading since last September (see Chart). The demand for manufactured goods, as measured by the current new orders index, showed a similar decline: The index fell 13 points and recorded its first negative reading since last October. The current shipments index fell just 3 points but remained slightly positive. Firms reported declines in inventories and unfilled orders, and shorter delivery times.

Firms’ responses suggested little overall improvement in the labor market this month. The current employment index remained positive for the ninth consecutive month, but only 14 percent of the firms reported an increase in employment, while 10 percent reported a decline. Only  slightly more firms reported a longer workweek (14 percent) than reported a shorter one (12 percent) and the workweek index was down only slightly from May.

There is good news: margins may finally improve:

Indexes for prices paid and prices received declined from May and continue a trend of moderating price pressures in recent months. The prices paid index declined sharply, by 22 points this month. Still, 37 percent of the firms reported higher prices for inputs this month, and 10 percent reported a decline. On balance, firms reported a slight rise in prices for manufactured goods: 17 percent reported higher prices for their own goods this month; 12 percent reported price reductions. The prices received index decreased 12 points, its second consecutive monthly decline.

Alas, the Hope is now extinguished:

The future general activity index decreased 14 points this month and has now dropped 61 points over the last three months (see Chart). The indexes for future new orders and shipments also declined, decreasing 9 and 14 points, respectively. The index for future employment fell 17  points and has declined 32 points in the last two months. Still, slightly more firms expect to increase employment over the next six months  (21 percent) than expect to decrease employment (16 percent).

And visually:

Next Zero Hedge prediction about to come true: Goldman will cut its H2 GDP forecast to sub 2% momentarily.

h/t Sean Corrigan