The Federal Reserve Bank of Richmond released its survey of manufacturing activity on Tuesday. The composite index for manufacturing declined to 2 in January from 6 in December, missing expectations for a fall to 3.

The decrease was mainly driven by declines in shipments, new orders and employment.

Shipments sub-index slid to -6 in January from -0 in December.

New orders sub-index was down to 4 from 8.

The employment sub-index declined to 9 from 12.

"The volume of new orders grew modestly this month, although shipments decreased. Hiring increased at a slightly slower pace compared to last month, although average wages continued to increase at a moderate pace in January, and the average workweek lengthened. Raw materials prices rose at a somewhat slower pace, while prices of finished goods rose at a faster pace than in December," the survey said.