UPDATE 1-NY Fed factory index hits 7-month low in December

Mon Dec 17, 2007 8:55am EST

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NEW YORK Dec 17 (Reuters) - Manufacturing activity in New York State factories declined sharply in December to a seventh-month low with falling new order and shipment indexes, New York Federal Reserve said on Monday.

The New York Fed's "Empire State" index of general business conditions fell to 10.31 in December from 27.37 in November. It was the lowest reading since May and below the 20.00 forecast by economists polled by Reuters.

The index on new orders dropped to 14.26 in December from 24.49 in November, while the reading on shipments fell to 21.08 in December from 32.19 in November.

Unfilled orders fell to -10.00, its lowest since December 2006, from -1.20 in November.

"There's a lot of weakness in unfilled orders, which can be considered a forward measure," said Robert Brusca, chief economist at Fact and Opinion Economics in New York. "It is consistent with idea that the economy is slowing down."

The inventories component fell to -10.00 in December from -1.19 in November, while the prices paid component fell to 35.00 in December from 42.86 in November.

Treasury debt prices briefly extended gains immediately following the release of the data.

The survey of manufacturing plants in the state is one of the earliest monthly guideposts to U.S. factory conditions. (Reporting by Chris Reese; additional reporting by Richard Leong; Editing by Tom Hals)

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