August 16, 2004

NEW YORK (Reuters) - Business activity at New York state factories slowed sharply in early August in one of the most dramatic turnarounds in years, a survey said Monday.

The Federal Reserve Bank of New York said the business conditions index of its Empire Manufacturing Survey slumped to 12.6 in August, the lowest reading this year and more than wiping out July's rise to 35.8. Analysts had been looking for the index to dip to 32.5.

"While 46 percent of respondents had reported improved conditions in July, only 28 percent -- the lowest level in more than a year -- did so in August," the Fed said. "Sixteen percent reported that conditions had worsened, compared with 10 percent last month."

The new orders index almost halved to 14.9 in August from 28.6 in July, while shipments tumbled to 11.9 from 34 in July.

"The unfilled orders index fell below zero for the first time since September of last year, with 13 percent of respondents reporting a rise in orders compared with 32 percent in July," said the Fed.

The Empire State prices paid index dipped to 49.6 in August from 56.4 the month before. Some 52 percent of respondents reported an increase in prices. The prices received index edged back to 16.3 from 18.0 in July.

The number of employees index bucked the trend, rising to 17.0 in August from 13.1 in July. The average workweek index remained volatile, diving to 6.8 from 22.5 in July.

The index measuring expectations for business conditions six-months ahead, eased to 47.6 in August from 52.8 in July.

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