The Federal Reserve Bank of New York reported on Monday that manufacturing in the New York region slowed down in May as the cost of raw materials soared.

The Empire State index fell to 11.88, well below the economists' estimates of 20. In April the index hit the record high of 21.70.

Readings greater than zero signal manufacturing expanding in the region of New York, northern New Jersey and southern Connecticut.

According the results, input prices rose sharply to 69.9 from 57.7, their highest level since July 2008 as the raw materials cost surged. And output prices also climbed from 26.9 to 28, indicating manufacturers trying to pass the cost pressure to customers.

But the results were absolutely not that bad. New orders and shipments still strong, though showing slower rates of growth than April. The Empire State gauge of new orders decreased to 17.2 this month from a one-year high of 22.3 in the prior month. A measure of shipments fell to 25.8 from 28.3.

And the employment measure rose to 24.7 from 23.1 in April, which was special positives with the number of employees on the rise and the workweek on the rise.

Besides, factory executives in the New York Fed's district were more optimistic about the future. The gauge measuring the outlook six months from now rose to 52.7 from 47.4.