The business survey, taken midway through the month, found the diffusion index of manufacturing activity dropped from minus 5.8 in May to minus 16.6 in June.
The index for new orders, shipments and average work hours all slipped below zero, indicating these activities are contracting, the Fed said.
The report said that indexes for unfilled orders and delivery times were also negative.
For the June survey, the Fed asked mid-Atlantic businesses if they expected to invest in capital improvements or new equipment.
The Fed said nearly 32 percent of respondents indicated they expected to increase spending on new plants or equipment in 2012. The figure is a decline from November 2011, when 34 percent indicated they planned spending on capital improvements.
Celebrity Families of 2014 [PHOTOS]