New York manufacturing activity expanded at a slower rate in the month of June, according to a report released by the Federal Reserve Bank of New York on Tuesday.

The New York Fed said its general business conditions index fell to 17.4 in June from 24.3 in May, although a positive reading still indicates growth in regional manufacturing activity. Economists had expected the index to dip to 22.0.

The bigger than expected decrease by the headline index reflected substantial slowdowns in the pace of growth in both new orders and shipments.

The new orders index tumbled to 16.3 in June from 28.9 in May, while the shipments index plunged to 14.2 from 29.7.

The number of employees index also edged down to 12.3 in June from 13.6 in May, indicating a modest slowdown in the pace of job growth.

The price indexes also retreated from last month’s record highs, with the prices paid index falling to 79.8 in June from 83.5 in May and the prices received index sliding to 33.3 from 37.1.

Meanwhile, the report said the delivery times index jumped to a record high of 29.8 in June from 23.6 in May, pointing to significantly longer delivery times.

Despite the slowdown in the pace of growth in June, the New York Fed said firms remained optimistic that conditions would improve over the next six months.

The index for future business conditions spiked to 47.7 in June from 36.6 in May, with the index for future employment reaching a record high.

“Healthy goods demand, rising business investment and reviving global activity will keep U.S. manufacturing advancing at a solid clip through the rest of 2021,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

On Thursday, the Philadelphia Fed is scheduled to release its report on regional manufacturing activity in the month of June. The Philly Fed Index is expected to edge down to 31.0 in June from 31.5 in May.

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