NY state factories nearly out of slump in July

By Burton Frierson

NEW YORK (Reuters) - The slumping factory sector in New York state nearly pulled out of contraction in July, posting the highest reading in more than a year as new orders surged, the New York Federal Reserve said on Wednesday.

The New York Fed's "Empire State" general business conditions index rose to minus 0.55 in July from minus 9.41 in June.

July's result was the strongest since April 2008's reading of 0.81, which was the last time it was in positive territory. It also exceeded economists' expectations of minus 5.0, based on the median of forecasts in a Reuters poll.

"The number was a decent number, showing that in the New York region, manufacturing was only slightly contracting in July," said Gary Thayer, senior economist at Wells Fargo Advisors in St. Louis.

"We saw some positive numbers on orders and shipments, the first we had seen in a long time, which suggests that maybe the manufacturing sector is turning a corner. It's still a tentative sign, but consistent with other reports showing that the recession may be near an end."

On Wall Street, stock index futures added to their gains after the data, which coincided with a report showing a slightly faster-than-expected monthly rise in U.S. consumer prices.

Government bonds, which generally perform better during times of economic weakness, added to their losses.

The New York Fed's new orders index jumped to 5.89 in July from June's minus 8.15, reaching its highest since December 2007.