NEW YORK (CNN/Money) - A measure of manufacturing in New York State fell in February to the lowest level in four months, the Federal Reserve Bank of New York said Tuesday.

The "general business conditions" index of the Empire State Manufacturing Survey, released monthly by the New York Fed, dropped to 1.1 from 20.7 in January. Any number above zero indicates expanding activity.

The reading was the lowest for the index since -14.6 in October.

"Respondents continued to be optimistic about the future, but were less so than in recent months," the Fed report said.

Pricing pressures continued to weigh on manufacturers, according to the survey, with the "prices paid" index rising to 19.2 -- the highest level since the survey began in July 2001 -- from 7.3 in January.

Meanwhile, the "prices received" index was -14.4, compared with -15.6 in January, a sign that businesses are paying more for commodities, but can't pass those costs on to retailers or consumers.

The survey's new orders index fell to 12.3 from 18.7 in January, while its shipments index fell to 11.8 from 22.8 in January.

The Empire Survey, a relatively new economic indicator but one that has earned the growing attention of economists, asks approximately 175 New York manufacturers about business conditions.

The survey could mean the Philadelphia Fed's survey -- a more established indicator of manufacturing activity -- also will fall, according to Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd.

"The drop in the headline sentiment index likely reflects war fears and may well be mirrored in Thursday's Philly Fed," Shepherdson said.

The Philly Fed will be released at noon ET on Thursday. Economists, on average, expect it to fall to 11.0 from January's 11.2, according to Briefing.com. Shepherdson is less optimistic, thinking the index will fall to 5.0.

Manufacturers have been suffering for years. Their recession got the jump on the broader recession, with the grandaddy of all manufacturing indicators, the Institute for Supply Management's index, falling to contraction levels in August 2000 and staying underwater until January 2002. About 2 million manufacturing jobs were cut during that time.

Manufacturing eked out some gains in 2002, but suffered late in the year, along with other businesses, from fears about the possibility of war in Iraq and an overhang of production capacity left over from the investment bubble of the late 1990s.