NEW YORK (CNNMoney.com) -- The pace of manufacturing growth slowed in August, according to a closely watched survey of industry executives released Tuesday that came in roughly in line with Wall Street expectations.
The Institute for Supply Management's manufacturing index slipped to 52.9 in the latest survey, down from the 53.8 reading for July. Economists surveyed by Briefing.com had forecast the index would slip to 53 in the latest survey.
Any reading above 50 indicates growth in the sector.
The report is one of the first economic readings from August. It is being particularly closely watched this month, as investors and economists try to predict if the recent credit crunch has slowed economic activity enough to prompt the Federal Reserve to cut rates at its next meeting Sept. 18.
The report held some good news about inflationary pressures faced by businesses, as the percent of those surveyed reporting paying higher prices fell to 33 percent from 38 in July. That is well off the 45 percent who were reporting paying higher prices as recently as May.
John Silvia, chief economist with Wachovia, said that while the Fed policymakers may see that prices paid component of the index being higher than they prefer, they'll probably be pleased by the direction of the price reading.
"I think it gives the Fed some wiggle room," he said. "It keeps the door open for the Fed to say 'We're a little more concerned about the economy than prices at this point.'"
The credit crunch that got so much attention in August didn't slam the breaks on manufacturing, Silvia said, but he said there are some signs of weakness in the latest ISM reading.
The survey found that new orders were softer in August, with those reporting fewer new orders rising to 21 percent from 16 percent, while those reporting better new orders fell to 27 percent from 30 percent. Those reporting an increase in their backlog of orders also fell, dropping to 19 percent from 23 percent in July.
The report also showed some areas of strength, as production levels were little changed and employment in the sector picked up slightly.
"So far the housing correction suggests slower growth but a recession is not in the numbers," said Silvia. 
