Thu Aug 19, 2004

NEW YORK (Reuters) - Factories in the U.S. Mid-Atlantic region slowed a little in August but remained at solid levels, although new orders fell sharply in a warning sign for future growth, a report showed on Thursday.

The Federal Reserve Bank of Philadelphia reported that its index of business conditions in the region fell to 28.5 in August from 36.1 in July, which had been the strongest growth since January.

Although the index was below economists' initial forecasts for a 32.0 reading, many analysts were anticipating a weak reading after a survey by the neighboring New York Fed showed a steep fall.

August marked the 15th month in a row that the index has been above zero, the level separating growth from contraction.

The new orders component, an indicator of future growth, slumped to 19.2 from 35.3 in July. Employment in the sector grew at a much slower pace, with the jobs component of the index easing to 17.2 from 24.6 the previous month, the Philly Fed said.

The Philly Fed survey is one of the first indicators of U.S. manufacturing every month and is often used to gauge the overall state of the nationwide sector.

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