A measure of the economy’s future performance dropped and the number of Americans collecting unemployment benefits surged to a record, evidence the recession is deepening as policy makers try to unfreeze credit markets.

The Conference Board’s index of leading indicators, a gauge of the economy’s direction over the next three to six months, fell 0.4 percent in February, less than forecast. Manufacturing in the Philadelphia area shrank for the 15th time in 16 months, a Federal Reserve report showed, and the Labor Department said 5.47 million Americans are getting jobless benefits.

“The economy is still in a mess” and manufacturing won’t turn around until consumer spending and exports pick up, said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, who accurately forecast the drop in the leading indicators index. “The Fed’s aggressive action removes a big downside risk and will support a recovery later this year.”

Today’s figures underscore the picture of a worsening economy that provided a backdrop for the Fed’s meeting this week, when the central bank pledged to buy as much as $1.15 trillion in assets to pump more money into the banking system. Chairman Ben S. Bernanke forecasts an economic recovery in 2010 as long as policy makers take sufficient action.

FedEx Outlook

FedEx Corp., a bellwether for the economy as the second- biggest American package deliverer, today reported its first sales drop in at least a decade. While the economy “will definitely be weak” for all of 2009, Chief Executive Officer Fred Smith said he doesn’t anticipate a “further significant decline” in gross domestic product.

Treasuries sustained gains from yesterday, when they posted the biggest intraday rally since records dating from 1962. Yields on benchmark 10-year notes were at 2.52 percent at 10:30 a.m. in New York, from 3.01 percent at the close two days ago. The Standard & Poor’s 500 Stock Index was down 0.2 percent at 792.75.

The leading index was forecast to drop 0.6 percent, according to the median of 60 economists in a Bloomberg News survey. Estimates ranged from a decline of 1.1 percent to no change. The Conference Board also revised January’s reading to a gain of just 0.1 percent, down from a previously estimated increase of 0.4 percent.

Four of the 10 indicators in the report subtracted from the index, led by a jump in weekly jobless claims.

Fed Action

The Fed yesterday kept the benchmark interest rate in the range of zero to 0.25 percent and said it will buy $300 billion in Treasuries, plus more mortgage and agency debt, in a bid to end the recession.

“The near-term economic outlook is weak,” the Fed said in a statement in Washington yesterday. Still, policy measures “will contribute to a gradual resumption of sustainable economic growth,” the Fed said.

The number of people on jobless benefit rolls jumped by 185,000 in the week ended March 7, the Labor Department’s report showed. Initial jobless applications last week topped 600,000 for a seventh straight time, the worst performance since 1982.

“We’re going to see some ugly numbers for a few more months,” Julia Coronado, a senior economist at Barclays Capital Inc. in New York, said in an interview with Bloomberg Television. The claims figures for this month mean the March employment report will be “every bit as bad” as the past three months, when payrolls dropped in excess of 650,000, she said.

Memphis, Tennessee-based FedEx also said today it would cut an unspecified number of jobs as it seeks to trim $1 billion from operating costs by next year.

Factory Slump

Manufacturing is among the industries under mounting stress. The Fed Bank of Philadelphia’s general economic index climbed to minus 35 in March from minus 41.3 a month earlier, the bank said today. Negative numbers signal contraction.

The headline index is a separate question unrelated to other measures in the report which showed employment sank to the lowest level since records began in 1968, and orders also fell.

“Manufacturers are clearly struggling -- not only domestically but globally,” said Steven Wood, president of Insight Economics LLC in Danville, California. “Smaller order books do not portend well for a substantial recovery in production.”

Industrial production fell in February for the fourth straight month, the Fed reported on March 16. National output at factories, mines and utilities dropped 1.4 percent after a revised 1.9 percent decline in January that was greater than previously estimated.

Alcoa Inc., the largest U.S. aluminum producer, said this week it plans to cut its quarterly dividend, sell stock and convertible notes and cut costs as it braces for its second straight quarterly loss. Capital spending in 2010 will be $850 million, about half this year’s planed outlays.

The New York-based company was preparing for “a prolonged downturn,” Chief Executive Officer Klaus Kleinfeld said in a statement March 16.