08/17/2015 10:51 EDT | Updated 08/17/2016 05:59 EDT

Empire State Manufacturing Index, Key Measure Of U.S. Economy, At Lowest Since Great Recession

Thick white smoke billows from a coal-fired power plant in Beijing, China Thursday, Nov. 13, 2014. Chinese leaders pledged for the first time to cap the country’s decades-long growth of greenhouse gas emissions. Since China emits more carbon and other heat-trapping gases than any other country, the pledge boosted global efforts to prevent catastrophic climate change. Fulfilling its pledge, however, will require China to transform a booming economy that still largely depends on polluting industries such as steel production and manufacturing. (AP Photo/Andy Wong)

WASHINGTON — Manufacturing activity in New York state contracted in August at the fastest pace since the Great Recession, pulled down by sharp declines in new orders and shipments.

The Federal Reserve Bank of New York said Monday that its Empire State manufacturing index plunged to minus 14.9 from a positive reading of 3.9 in July. That is the lowest level since April 2009. Any reading below zero indicates contraction.

A gauge of new orders fell to minus 15.7 from minus 3.5, while a measure of shipments dropped to minus 13.8 from positive 7.9. A measure of employment slipped to 1.8 from 3.2, suggesting companies are adding fewer workers.

U.S. manufacturers have been struggling with a variety of headwinds, including weak overseas economies in Europe and China, that have cut into exports. The dollar has also risen about 20 per cent in value in the past year, which can also reduce exports by making them more expensive.

Cheaper oil, meanwhile, has reduced demand for steel pipe and other drilling equipment.

Yet some economists were skeptical about the Empire State figure, since recent nationwide manufacturing data has shown signs of rebounding.

"Given the limited manufacturing base in the New York area, we take this morning's negative surprise with a grain of salt,'' Jesse Hurwitz, an economist at Barclays Capital, said in a research note.

Nationwide, factories are boosting output on the back of stronger domestic demand. Employers have added nearly 3 million jobs in the past 12 months, enabling more Americans to spend on large items such as autos.

A separate report from the Federal Reserve in Washington last week showed that U.S. manufacturing output rose a healthy 0.8 per cent in July after falling 0.3 per cent in the previous month. July's gain was driven by greater production of autos, clothes and plastics.

Also on HuffPost:

Photo gallery World's Most Competitive Countries, 2015 See Gallery