N.Y. manufacturing index weaker

NEW YORK (CNNMoney.com) -- A measure of manufacturing in New York State weakened in June for the fourth time in five months, suggesting a slowdown, according to a report Monday by the Federal Reserve Bank of New York.

The general business conditions index of the Empire State Manufacturing Survey, released monthly by the New York Fed, softened 5 points to negative 8.7 in June. A reading that is positive suggests growth, while a negative reading suggests a slowdown in the sector.

This month's results were weaker than expected, suggesting that New York manufacturing is slowing, according to Jim Glassman, senior economist at JP Morgan Chase.

"The manufacturing sector is stagnant, it's not falling apart, but it's not growing. It's sluggish, but we're not in recession mode yet," Glassman said.

He noted that the New York manufacturing sector is "very tiny" compared to other states, and it consists mainly of small manufacturing, such as button factories and apparel shops.

Jason Bram, an economist with the New York Fed, said this month's survey fell short.

"It's a weak number. It had rebounded in April, but then it just went down again for the next two months," he said.

The data is gathered from a pool of about 200 manufacturing executives in New York State, from a wide range of industries.

Pricing pressures eased slightly for manufacturers. The "prices paid" index dipped to 66.3, down from May's record high, with 69% of respondents reporting that prices had risen in June.

Meanwhile, the "prices received" index increased 11 points to 26.7, approaching a record level, with 31% of those surveyed reporting that prices had risen. As manufacturers increase their costs to other companies that make goods, they in turn decide whether or not to pass on those hikes to consumers.

The general business conditions index declined for second consecutive month. According to the report, 30% of responding businesses reported conditions had deteriorated, while 21% said conditions had improved in June.

This month's survey shows businesses in 2008 were more restrained in their capital spending than they were in 2007. The June 2008 survey found that 32% of responding companies reported an increase in overall capital spending in 2008, while 36% reported a reduction. Last year, 43% of firms reported increases and just 26% reported declines.

The new orders index posted a decline, softening to negative 5.5 in June, marking the sixth consecutive month in which levels hovered at or below zero.

The shipments index weakened to 11 points, to negative 6.5, and the unfilled orders index fell to negative 10.5.

The delivery time index dropped to negative 7 and the inventories index remained below zero, at negative 2.3.

The outlook for the future "remains subdued," according to the report, but it is more positive than it was in May. The future general business conditions index rose 8 points to 32.2, with 47% of businesses expecting conditions to improve over the next six months, and 15% expecting conditions to worsen.