American manufacturing expanded in April for the 15th consecutive month but the pace of the expansion slowed slightly and suggested that the broader economy may be losing a bit of momentum, the group of executives who do the buying for U.S. factories said Monday in a widely followed monthly survey.

The survey results from the

National Association of Purchasing Management

, considered some of the freshest non-government data on how the economy is performing, were slightly weaker than expected. A main reason for the weakness was a heavy reduction in inventories, which meant factories were not producing as much.

The purchasing managers survey is seen largely as a barometer for broader economic growth, and the April results highlight the ever-so-slight slowing trend for manufacturers in recent months that has come as interest rates have risen. An index calculated from the survey results has declined three out of the past four months.

But the overall pace of growth remains high, and is likely to offer little comfort for

Federal Reserve

policymakers, who have been raising interest rates out of concern that elements of the vibrant economy are sowing the seeds of inflation. Higher rates tend to slow the economy by making it more expensive for consumers and businesses to borrow and spend.

The purchasing managers' April data suggest a 4.5% annualized rate of

gross domestic product

growth, slower than the 5.4% annual GDP pace that

Commerce Department

reported for the first quarter, but still above the 3% to 4% pace that would likely ease the Federal Reserve's inflation fears.

The survey composite index slipped to 54.9 in April, compared to 55.8 in March. A reading above 50 denotes growth, while a below-50 reading indicates a contraction. The index for factory production rates slowed to 58.2 from 61.8 in March, but the index for inventories fell to 45.2 from 48.4 in March.

"While it appears that we've lost a bit of the vigor that has been there for manufacturers, this doesn't represent any sort of warning flag that manufacturing is starting to falter," said Michael Moran, chief economist at

Daiwa Securities

in New York.

The growing rate of hiring in the sector and still-robust levels of production and new orders are hints that manufacturing is not about to start contracting any time soon. The report's employment index increased to 53.2 from 51.5, showing that payrolls in the sector continue to grow even as the nation's low unemployment rate makes workers harder to find.

"Firms are hiring and given that order books remain in good shape the manufacturing sector should remain in excellent shape for the rest of the year," said Joel Naroff, president of

Naroff Economic Advisors

in Holland, Pa.

Prices paid by manufacturers for raw materials and energy continued to rise in April, but at a slower pace due to a dip in energy prices as most oil-producing nations agreed to increase production following March's 10-year high for oil prices. While some economists still fear that prices for raw materials will eventually be passed on to finished-goods prices, resulting in inflation, the fall is seen as a promising sign that the intensity of cost pressures might be easing.

Still, Fed policymakers may be troubled by recent signs that inflation at the consumer level has started to accelerate and that employee wages and benefits have started to rise faster. In an attempt to avert inflation by slowing economic activity, the Fed has raised short-term interest rates five times in 0.25 percentage point increments since June 1999.

In theory, higher rates slow economic growth by making it more costly for consumers and businesses to borrow and spend, but the Fed's efforts so far have had little obvious impact. GDP grew at a 7.3% annual rate in the fourth quarter of 1999, and a preliminary reading showed 5.4% GDP growth for the first quarter. Meanwhile, inflation has started to show itself more prominently, as the

Consumer Price Index

rose 0.7% in March, following a 0.5% increase in February.

Most economists are expecting the Fed to continue raising rates when its policymaking committee meets May 16, but they are split on whether the Fed might up the magnitude of a hike to 0.50 percentage point.

A moderation to the 4.5% GDP pace hinted at by the purchasing managers survey Monday might be enough to dissuade the Fed from upping the magnitude of a rate increase, said Moran. But he and others said the

Labor Department's

report on April employment, to be released this Friday, will likely have more influence.