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Published: Thursday, 7/28/2011

Manufacturing, growth slow, Fed report says

ASSOCIATED PRESS
A Boeing employee works on a 767 in Everett, Wash. A large decline in orders for commercial aircraft played a major role as orders for durable goods fell 2.1 percent in June, the Commerce Department reported. The decrease was the second in three months.  A Boeing employee works on a 767 in Everett, Wash. A large decline in orders for commercial aircraft played a major role as orders for durable goods fell 2.1 percent in June, the Commerce Department reported. The decrease was the second in three months.
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WASHINGTON -- The economy worsened in much of the country in June and early July, hampered by high unemployment, weak home sales, and signs of a slowdown in manufacturing.

A survey by the Federal Reserve, released Wednesday, found that weak consumer spending, slow job growth, and tight credit are restraining growth going into the second half of the year.

The report said growth had slowed in seven of the Fed's 12 bank regions in June and early July, compared with the spring. The showing was the worst this year.

The Fed's survey found that factory output weakened in some areas. That is likely to heighten concerns that manufacturing, one of the economy's few bright spots over the past two years, is sputtering.

In the Cleveland region, which includes all of Ohio, the report said business activity continued to expand at a modest pace, but more slowly than during the prior report period. It said manufacturers recorded a slight rise in production and new orders.

Wednesday the federal Commerce Department released a report which said that businesses reduced orders for airplanes, autos, heavy machinery and other long-lasting manufactured goods in June.

Orders for durable goods fell 2.1 percent, the department said. That was the second drop in three months. The decline was driven by a big drop in orders for commercial aircraft. Orders for autos, auto parts, and computers also fell. And a key category that tracks business investment plans dropped 0.4 percent.

The Fed's report found that the job market remained weak in most of the 12 districts. Consumer spending improved, aided by a drop in gas prices, which had peaked at nearly $4 a gallon in early May. But auto sales dropped. Supplies at many dealers remained tight because of disruptions stemming from Japan's March 11 earthquake.

Droughts and severe flooding weakened seven districts with major agricultural sectors, the report said.

Manufacturing output rose overall. But many districts reported only "steady or slowing" growth, the Fed report said. Only two districts -- Cleveland and Kansas City -- reported rising manufacturing activity. Companies in three districts -- Philadelphia, Richmond, and Atlanta -- reported slower growth.

The overall weak picture of the national economy echoes recent data on hiring and manufacturing.

Economists expect growth for the April-June quarter, which will be reported Friday, will be only 1.7 percent, the second straight quarter of anemic expansion.

The report, known as the "Beige Book," is based on anecdotal information gathered by officials at the 12 Fed regional banks. It is released eight times a year.



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