The latest survey from the Federal Reserve Bank of Richmond revealed on Tuesday that the U.S. fifth district's manufacturing softened in December.

According to the report, the composite manufacturing index declined from -1 in November to -5 in December, due mainly to decreases in the already negative indexes for shipments and new orders. Meanwhile, the third component - employment - rose slightly. Manufacturers reported weakness in local business conditions and capacity utilization, but they were optimistic that conditions would improve in the coming months, the Richmond Fed added.

Economists had expected a reading of +9.

A reading above 0 signals expansion, while a reading below 0 indicates contraction.