NY manufacturing grows, US import prices slip

Manufacturing in New York state grew in June even as hiring slowed, supporting views the factory sector is recovering, while US import prices recorded their largest decline in nearly a year in May.

The data is the latest sign of strength in manufacturing and follows recent US reports suggesting the rebound may be losing momentum, including one showing US private employers hired fewer workers than expected in May and another showing a surprise decline in May retail sales.

The Empire State general business conditions index edged up to 19.57 in June from 19.11 in May, the report from the New York Federal Reserve said on Tuesday. The June reading was slightly below what economists polled by Reuters had forecast.

However, the index for the number of employees fell in June from May.

"The manufacturing recovery remains fairly strong. It supports the view that the fiscal crisis in Europe has not impacted on the US economy for now," said Paul Dales, US economist at Capital Economics in Toronto.

Moody's Investors Service downgraded Greece's debt rating to junk status on Monday, underscoring fears about the effect of Europe's debt woes on the global recovery. A poll on Tuesday showed German analyst and investor sentiment fell in June by the most since the height of the financial crisis in 2008.

A separate report released on Tuesday showed US import prices declined in May as petroleum costs plummeted, bolstering projections of tame inflation and low interest rates.

Import prices fell 0.6%, the biggest decline since July, after rising by a revised 1.1% in April, the Labor Department said.

Strength in the US dollar is also helping to keep inflation pressures muted and this should allow the Fed to renew its low interest rate pledge at next week's monetary policy-setting meeting.

US stocks rose sharply, boosted by gains in the euro, which hit a two-week high against the dollar . US Treasury debt prices were mostly flat.

Adding to disappointment for the retail sector, electronics chain Best Buy Co reported earnings and revenue that missed Wall Street's consensus forecasts, citing a decline in prices for televisions.