PHILADELPHIA -- The manufacturing sector in eastern Pennsylvania, southern New Jersey, and Delaware grew more slowly in May than in previous months, according to a survey by the Federal Reserve Bank of Philadelphia.

Manufacturers with at least 350 employees still expect business to expand, the business outlook survey found, but they are less optimistic than a month ago. Some indicators of the future fell to their lowest levels in more than two years.

Among the indicators, the shipments index declined marginally from April to May, with 36% of respondents reporting increases in May shipments; 17% reported declines. The index for new orders declined, with only 29% percent of manufacturers reporting increases, compared with 38% in April and nearly 48% in January and February.

Current employment indicators suggested no overall change in the number of factory workers and average hours worked. But only 16% of the manufacturers expect to hire additional workers, while 27% plan job cuts.

Prices of manufactured goods remain stable, despite reported increases in the costs of inputs. A sizable percentage of companies expect higher prices for their goods in the next six months.

The survey went to about 500 companies; 166 responded.

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