The Federal Reserve Bank of Philadelphia’s index of manufacturing activity in the mid-Atlantic region registered -24.3 this month, diving from -8.9 in January.

Manufacturers’ costs shot up for the first time in 10 months, while factories’ price increases “slowed dramatically,” Reuters said. (See “Wholesale Inflation Stronger in January Than Predicted” in this issue.)

Subindexes tracking new orders, shipments, delivery times, and number of workers all declined.

Businesses said they would increase their prices by an average of 4.5 percent in the next 12 months, down from the average 4.8 percent they predicted in November and significantly less than the 7-percent average by which they raised prices in 2022.

TREND FORECAST: These numbers tell the true story of how the economy is weakening, but yet it is being underplayed. Before the numbers were released, The Street was betting manufacturing activity would actually increase for a third consecutive month, according to a Reuters poll. None predicted a figure as low as the bank’s index posted.

If the Federal Reserve stays on track to increase interest rates in their next three meetings, this bad situation will turn terrible. Again, it takes time for the rising rates to do their damage… and the time has come.