Manufacturing activity in the Richmond Federal Reserve Bank’s district unexpectedly contracted in July.

The Richmond Fed’s index of manufacturing activity fell from a reading of 3 the prior month to a score of negative 12, the lowest level since January of 2013. Scores below zero indicate contraction. Economists had expected a slight improvement to a score of 5.

All three components of the composite index—shipments, new orders, and employment—registered declines for July.

The outlook for the future, however, is far more positive. Expectations improved almost across the board, indicating that businesses see the current softness as transitory. But even here there were some signs of hesitancy, with expectations for capital expenditures and equipment and software spending dipping slightly.

The survey’s results for July contrasts with those of the Philadelphia and New York Fed, both of which showed a rebound in activity last week.