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By Evan Sully

Aug 16 (Reuters) - The New York Federal Reserve said on Monday its barometer of manufacturing business activity in New York State declined more than expected in August after growing at a record-setting pace in the month before.

The regional Fed's "Empire State" index on current business conditions fell around 25 points to 18.3, lower than a reading of 29.0 forecast by analysts polled by Reuters. The index had hit a record high of 43 in July.

A reading above zero signals the New York manufacturing sector is expanding.

The headline index was lower than all but one of the 30 estimates in the Reuters forecast, and the 24.7 point drop was the largest since April 2020, early on in the pandemic.

Supply constraints have continued to slow manufacturing activity nationwide, indicating that the economic recovery might be cooling off in a year in which growth is projected to accelerate at its fastest pace in almost four decades.

New York's manufacturing firms were optimistic, however. The survey's six-month outlook gauge rose seven points to 46.5.

The indexes for future new orders and shipments rose to similar levels. (Reporting by Evan Sully; Editing by Chizu Nomiyama)