Dennis Hoffman, vice president of Buttonwood Corp., monitors a machine at the company's manufacturing facility in the Brooklyn borough of New York. Scott Eells / Bloomberg

The New York region's manufacturing survey shows a significant decline for May.

The New York Federal Reserve's general business conditions index dropped below zero for the first time since January to -1.4, four points below the previous month's 3.1. Not only did the sector contract, but it performed far below expectations. The consensus expectation among economic analysts from Thomson Reuters and Bloomberg was for the industry to see an increase in May to 4.0 points above zero.

The monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Federal Reserve Bank of New York

One of the most striking results of the survey is that the region's manufacturers took heavy hits on the prices they charge their buyers. Respondents to the survey, which reflects manufacturers' willingness to discount products, expected an increase of just 1.2 percent in prices they received for their goods, which is the smallest expected increase recorded since May 2007. They anticipate that the prices they will pay for inputs in May will climb by 2.8 percent, the smallest rise since May 2009.

The New York Fed's index of new orders continued its four-month decline, this time slipping to a negative level at -1.2, signaling that businesses are scaling back their purchase of new or replacement products. Shipments stayed unchanged at the zero mark, yet there was another dramatic drop to the employee workweek, which reflects a decline in demand for productivity and shop activity. The workweek ended its streak of four months of growth, dropping sharply by 4.5 points.

The NY Fed said that optimism about future conditions had weakened as indices for the six-month outlook were generally lower than they have been recently.