Good New York Fed Manufacturing News Not as Good as It Looks

Ty Wright | Bloomberg | Getty Images

A welder builds parts for finished petroleum tanks at Southern Tank and Manufacturing Inc. in Owensboro, Kentucky, U.S.

The pace of growth in New York state manufacturing slowed more than expected in April as new orders tumbled, the latest data to suggest the economy lost some steam heading into the second quarter, data from the New York Federal Reserve showed on Monday.

The New York Fed's "Empire State" general business conditions index fell to 3.05, from 9.24 in March, short of economists' forecasts for a smaller decline to 7.

New orders dropped to 2.20 from 8.18. Inventories improved modestly though still remained in contraction territory, rising to minus 4.55 from minus 5.38. Prices paid rose to the highest level since May 2012, at 28.41 from 25.81.

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But employment gauges strengthened, with the index for the number of employees rising to 6.82 from 3.23 and the average employee workweek index gaining to 5.68 from zero.

The index of business conditions six months ahead pulled back to 31.95 from 36.43.

The survey of manufacturing plants in the state is one of the earliest monthly guideposts to U.S. factory conditions. A reading above zero indicates expansion.

After contracting through the latter part of 2012 into the new year, the sector bounced back in February only to cool off in the months since.

It was a fresh signal that the U.S. economy lost some momentum in the spring after generally upbeat data at the beginning of the year. Economists expect second-quarter growth will be weaker after the government spending cuts known as the sequester kicked in in March.

U.S. stock index futures added to losses shortly after the data.