Key Manufacturing Index Unexpectedly Plummets

A gauge of manufacturing in New York State showed the sector unexpectedly contracted in June, falling below zero for the first time since November 2010 in another sign the economic slowdown could become more protracted, the New York Federal Reserve said in a report on Wednesday.

The New York Fed's "Empire State" general business conditions index fell to minus 7.79 from positive 11.88 the month before. Economists polled by Reuters had expected a gain to 12.50.

The new orders and shipments indexes also deteriorated. New orders tumbled to minus 3.61 from 17.19, while shipments dropped to minus 8.02 from 25.75. New orders were also at their lowest since November 2010.

The survey of manufacturing plants in the state is one of the earliest monthly guideposts to U.S. factory conditions.

Employment gauges also worsened, with the index for the number of employees falling to 10.20 from 24.73 and the average employee workweek index weakening to minus 2.04 from 23.66.

The index of business conditions six months ahead declined to 22.45 from 52.69, falling to its lowest level since March 2009.