The numbers: The Philadelphia Fed manufacturing index in June fell to just 0.3 after registering a four-month high of 16.6 in the prior month.

Any reading above zero indicates improving conditions. Economists polled by MarketWatch expected an 8 reading.

What happened: The components declined in June but stayed in positive territory. The new orders index declined to 8.3 in June from 11 in the prior month. Shipments fell to 16.6 from 27.6 in May. The current price index dropped 17 points to 0.6, the lowest reading since October 2016.

In a special question, 49% of the firms surveyed expect an acceleration in the growth rate of production in the third quarter.

Big picture: A similar survey conducted by the New York Fed for the state of New York saw sentiment plunge by a record amount into negative territory in June. Taken together, the two reports suggest that the national ISM manufacturing purchasing managers’ index might show a reading below 50%, or contraction in activity, for the first time since August 2016. Fed Chairman Jerome Powell on Wednesday noted that business investment is a weak link in the economy.

What are they saying: “In short, the headline index was weaker than expected, albeit not as weak as the comparable NY Fed index, while the details of the report were much stronger than the headline data. Net, net the Philadelphia data continue to signal a positive trend in manufacturing, albeit at a slower pace than last year; the headline index averaged 21.1 last year,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.