The New York Fed's Empire State index of business conditions, a measure of manufacturing activity in the country, fell 6.5 points in October to a negative 4.6, according to the regional Fed bank report on Monday.
Economists even expect a negative reading of 6, based on a survey by the Wall Street Journal. Any reading below zero indicates deteriorating conditions.
The shipping index declined to 1.4 in the month. Unprocessed orders declined 19.1 points to a negative value of 13.9. Employment increased slightly in October while prices declined slightly.
Looking ahead, firms are still relatively optimistic about the six-month outlook, the regional Fed bank reported.
The overall decline in October came after a strong increase in September. The index has been highly volatile over the past two years with some very negative readings followed by gains.
Some economists see signs that manufacturing is bottoming out, but other economists are more skeptical about a reversal of this trend.
Last month, the nationwide ISM factory index improved to 49% in September. While still negative, it was the highest reading in nearly a year.
DJIA SPX stocks are expected to open slightly higher on Monday, while the 10-year bond yield rose to 4.70% in early trade.
