Wednesday's ISM-NY Inc. report said the city's Index for Current Business Conditions dropped from 55.2 percent in July to 51.4 percent in August.
The six-month outlook for businesses dropped from 61.7 percent to 61.3 percent in August.
The report said "purchase volume contracted, but not employment," meaning business slowed but employers have not reacted by reducing payrolls.
"Quantity of Purchases, 47.5 percent in August, contracted back-to-back for the first time in a year," while the Employment Index reached 55 percent, a 15-month high, the report said.
Figures below 50 indicate a contraction, while higher numbers indicate growth.