The Richmond, Va., Federal Reserve Bank said data showed manufacturing activity slowed sharply in the central Atlantic states in July.
The overall manufacturing index showed business activity, which fell to minus one in June, dropped another 16 points to minus 17 in July.
Prior to June, manufacturing had enjoyed six consecutive months of growth.
The new orders index fell from minus 7 to minus 25. while the jobs index dropped from 8 to one.
The manufacturing employment index dropped seven points to minus seven, while the wage index rose two points to nine, the Fed said.
The Richmond Fed said service sector activity also "weakened" in July with slower traffic in retail stores "despite solid big-ticket sales."
In the month, retail inventories declined. Non-retail service work also slowed, the Fed said.
For the survey, taken in the first half of each month, the index for revenues at service firms dropped from 14 in June to minus 11 in July. The index for employees in service-oriented firms fell from 10 to minus two.