(Reuters) – Factory activity declined in New York State in January due to an increase in COVID-19 infection rates. However, manufacturers remain optimistic about the future of business for the six months ahead.

On Tuesday, the New York Federal Reserve reported that its Empire State index of current business conditions fell 32.6 points to an reading of -0.7. This was the negativest reading since June 2020.

Any reading lower than zero indicates contraction in New York’s manufacturing industry.

New York is being hit by a severe winter wave of Omicron virus infections. This has caused serious disruption to business activities. Survey results gave an indication of Omicron’s effect on the economy.

According to manufacturers, orders fell sharply. New orders index fell 32 points, to a reading -5.0 in the survey. Although there was a decrease in the number of shipments, the unfilled orders measure fell by 32 points to -5.0. The long waiting periods by factories for deliveries to occured, which kept prices high.

However, manufacturers are generally positive about the future outlook over the next six-months. This month, the index of future business conditions fell 1.3 points to 35.1

The index of capital expenditures rose two points to 36.7, an all-time high for the past three years. It suggests that capital spending plans are being made by firms in order to increase capital spending over the coming months.