Any more weak economic data and the call will go out to the grand poohbahs of the National Bureau of Economic Research, the arbiter of all things cyclical, to convene in order to determine the start date of the recession!

While the 0.4 percent increase in industrial production in May came as a big surprise, the monthly manufacturing barometer from the Philadelphia Federal Reserve could not have been worse. The overall index, which is not a composite but reflects instead manufacturers’ assessment of the level of general business activity, plunged in June to a level not seen in a year and a half, when U.S. exporters were recovering from the effects of the Asian slump.

Almost all the component indexes the new-orders index, shipments index, unfilled-orders index and inventory index fell in June. Firms reported slower delivery times, suggesting no supply bottlenecks.

If the bond market really believed the message of the Philly Fed Index almost no growth in manufacturing, not to mention retail sales going into reverse in April and May it would probably be having a better day instead of struggling to recoup losses following the Fed’s report of an unexpected increase in industrial production.

Actually, industrial production is one of the few bright spots in a two-week stretch of remarkably weak economic news.

“The data suggest that things slowed significantly in May,” says Ward McCarthy, economist and managing director at Stone & McCarthy Research Associates. “It’s unusual for it to occur in such an abrupt fashion unless there’s a catalyst, of which I’m not aware.”

Fed officials sound unconvinced by the data, too. Richmond Fed President Al Broaddus said that higher short-term interest rates “are required to restore macroeconomic balance and ensure sustained higher growth over the longer term.”

Meanwhile, Fed chief Alan Greenspan let it slip via Argentine Economy Minister Luis Machinea that the case for raising rates has become less convincing.

Still, even Greenspan would admit that it’s too early to declare victory. McCarthy thinks that the Fed, like the economy, is just taking a breather.

“The Fed has been a reluctant tightener all along,” he says. “They will have more to do as the year progresses.”

Caroline Baum is a columnist with Bloomberg News.