The Federal Reserve Bank of New York’s Empire State manufacturing index fell slightly in March, from a February reading of 10 to a new reading of 9.2. Any number above zero indicates expansion. This is the second consecutive month of expansion in the index after six straight months of below-zero readings.

The price indexes rose, indicating that producers were paying more for inputs, and the selling prices stayed flat, indicating that the producers have not yet decided whether to pass rising costs along to consumers.

The employment indexes continue to show “sluggish” labor market conditions. Looking ahead, the six-month outlook indicates that manufacturers anticipate future general business conditions to rise to their highest levels in nearly a year.

The consensus estimate for the Empire State index had called for a reading of 10, so today’s report was a bit of a disappointment. But the good news is that growth continues after contracting for the last half of 2012.

The Federal Reserve’s report on industrial production is due out before markets open this morning and is expected to post a gain of 0.5%.

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