Reports show U.S. growth weak if not in recession

By Ros Krasny

CHICAGO (Reuters) - The U.S. economy continues to bump along at a slow level of growth but has probably not fallen into recession, a series of regional purchasing managers' reports suggested on Monday.

National surveys this week are expected to show the factory sector shrinking a bit in June while the services side ekes out a small gain. Between the two, the United States is managing to stay in the positive growth column.

The closely watched National Association of Purchasing Management-Chicago survey showed conditions in the Midwest region contracted for a fifth straight month, although at a less severe rate than Wall Street analysts had expected.

"We are surprised that the Chicago PMI was not weaker in June given the region's sensitivity to the ailing auto sector," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities.

The NAPM-Chicago business barometer rose to 49.6 from 49.1 in May, the strongest since January and above the median forecast of 48.0. A reading below 50 indicates contraction. The index has revived from February's 44.5.

"It looks as if manufacturing in the Midwest is holding its own," said Gary Thayer, senior economist at Wachovia Securities in St. Louis. "Things aren't getting a lot better, but are stable at this point,"

Still, sub-components of the Chicago index looked less promising than the headline, analysts noted. Production, at 45.1, was the lowest in 90 months, and new orders dropped to 52.0, the lowest since February.

"In response to the housing slump, higher energy costs and iffy consumer spending in the second half, businesses are cutting their outlays," said Lindsey Piegza, economic analyst at FTN Financial in New York.