N.Y. manufacturing lowest since May '05

Business conditions worsened for New York manufacturers, according to a Fed report.

NEW YORK (CNNMoney.com) -- Business conditions for manufacturers in the state of New York worsened for the fourth straight month, according to the Federal Reserve Bank of New York's Empire State Manufacturing Survey released Friday.

The regional Fed's general business conditions index for New York manufacturers tumbled nearly 21 points to -11.7 in February, falling below zero for the first time since May 2005. The survey of manufacturing executives across the state points to declining new orders and shipments and lower employment this month.

According to the Fed survey, the gloomy report mainly hinges on the declining dollar, as poor domestic sales outweighed improved sales abroad. The report said the weak dollar also led to an increase in the cost of materials, and a slumping economy hurt customers' ability to pay bills on time.

Of those surveyed, 34% said overall business conditions have worsened over the past month, up from 19% who said the same in January. Only 22% said conditions had improved. The outlook for the future was somewhat positive but much bleaker than the same time last year, as employment and spending are expected to decline this year.