(fxcue news) - Following a significant turnaround in the previous month, the Federal Reserve Bank of New York released a report on Tuesday showing regional manufacturing activity has returned to contraction in the month of October. The New York Fed said its general business conditions index tumbled to a negative 11.9 in October from a positive 11.5 in September, with a negative reading indicating contraction. Economists had expected the index to decrease to a positive 2.3. The much sharper than expected pullback by the headline index came amid significant downturns by new orders and shipments. The new orders index plunged to a negative 10.2 in October from a positive 9.4 in September, while the shipments index plummeted to a negative 2.7 in October from a positive 17.9 in September. Meanwhile, the report showed an improvement in labor market conditions, with the number of employees index jumping to a positive 4.1 in October from a negative 5.7 in September to record its first positive reading in a year. The average workweek index also rose to 4.7 in October from 2.9 in September, pointing to small increases in employment levels and hours worked. The report also said the prices paid index climbed to 29.0 in October from 23.2 in September, while the prices received index increased to 10.8 in October from 7.4 in September. Despite the downturn in October, the New York Fed said optimism about the six-month outlook grew strongly, with the index for future business activity jumping to a multi-year high of 38.7 in October from 30.6 in September. On Thursday, the Federal Reserve Bank of Philadelphia is scheduled to release its report on regional manufacturing activity in the month of October. Economists currently expect the Philly Fed's diffusion index for current general activity to inch up to 3.0 in October after jumping to 1.7 in September, with a positive reading indicating growth.