Factory activity in New York shrank for the fifth straight month in December, forcing significant job cuts.

The New York Federal Reserve’s Empire State manufacturing index, released Tuesday, did improve but stayed in negative territory. It moved up to minus 4.6, from minus 10.7. Any figure below zero indicates contraction.

There were some signs that the negative readings could be slowly turning around. A gauge of new orders increased to minus 5 from minus 11.8. And a measure of shipments jumped 10 points into positive territory, at 5.5.

Yet a measure of employment dropped sharply, to minus 16.2 from minus 7.3.

U.S. factories are closing out a tough year. A strong dollar and slow overseas economies have cut into U.S. manufacturers’ exports. And oil and gas drillers have sharply reduced their orders for heavy equipment in the face of falling oil prices.

Manufacturers in New York appear to be responding by lowering labor costs. The average work week fell in December to its lowest level since early 2009, the New York Fed said.

Other recent manufacturing data has sent mixed signals. There are some signs that factory output has bottomed out, while other reports suggest manufacturers are still struggling. Either way, the strong dollar is likely to weigh on the sector for months.

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That’s partly because the Federal Reserve is expected to announce its first increase in short-term interest rates in nine years on Wednesday. Yet interest rates will likely remain low in Europe and Japan. Higher rates in the U.S., compared with other developed countries, will push up the dollar’s value.

Still, U.S. factory production rose in October for the first time in three months, the U.S. Fed said last month, boosted by stronger output of cars and computers. The Fed will release updated data on the nation’s manufacturing sector on Wednesday.

Yet a private survey of manufacturers released earlier this month found that factory activity shrank in November for the first time in three years. U.S. manufacturers said new orders fell that month compared with October, while production also declined.