RICHMOND -- Virginia factories operated at 83 percent of capacity during July, up from June's 82 percent rate, but other signs of industrial activity slowed, the Federal Reserve Bank of Richmond said.

"A survey of Virginia manufacturers ... suggested that the state's manufacturing activity decreased slightly in July from early June. More respondents reported decreases in shipments, new orders, export orders, inventories, employment and the length of the workweek than reported increases," said Craig Carlock, an assistant economist with the Richmond Fed.

"Nearly half of those surveyed, however, expect new orders and shipments to increase over the next six months," Carlock said Wednesday. "Manufacturers noted that the costs of raw materials and the prices received for finished changed little over the survey period."

A report on Virginia manufacturing is done once every six weeks as part of economic monitoring of the 5th Federal Reserve District. The district also covers Maryland, the Carolinas, West Virginia and the District of Columbia.

The Virginia factory usage rate for July was ahead of the 80 percent rate reported for the Mid-Atlantic region during the same period. In July 1989, the Virginia rate was 83 percent.

When asked about the current level of business activity in their locality, 52 percent of the Virginia respondents saw no change in July compared to June. Twelve percent saw an increase, and 36 percent saw a decrease.

Thirty-three percent said they expected no change in local activity during the next six months. Another 33 percent expect a decrease in activity and another 33 percent expect an increase.

Forty-four percent of those surveyed identified poor sales as the greatest problem facing them. Another 16 percent chose government regulations, while 12 percent cited labor productivity. Other major problems were foreign competition and excess capacity.

The Richmond Fed also asked producers if loans had become more expensive in the six weeks before receiving the survey. Sixty-one percent responded no while 9 percent said credit costs had increased. Thirty percent said they did not borrow money.