Empire State Building shooter kills 2

Police collect evidence at the scene. (AAP)

Police collect evidence at the scene. (AAP)

A man who had been laid off killed a manager at his previous firm outside New York's Empire State Building before being killed by police.

A women's accessories designer fatally shot a vice-president from his former company outside New York's Empire State Building, causing a chaotic showdown with police that killed the gunman and wounded nine others, some by stray police bullets.

The shooting on Friday set off chaos at the height of the summer travel season and just after the morning rush hour. Police on their regular anti-terrorism duties in the highly touristed shopping area rushed to the scene.

"People were yelling 'Get down! Get down!"' said Marc Engel, who was on a bus in the area when he heard the shots.

"It took about 15 seconds, a lot of 'pop, pop, pop, pop,' one shot after the other."

Engel saw the wounded scattered along the footpath, including one person "dripping enough blood to leave a stream".

Mayor Michael Bloomberg said some victims may have been hit by police bullets as officers confronted the gunman.

The wounded victims included five women and four men, aged 20 to 56, authorities said. All were expected to survive.

"This was a terrible tragedy," Bloomberg told a press conference. "We are not immune to the national problem of gun violence."

Bloomberg has spoken out in recent weeks for gun control after mass shootings at a Sikh temple in Wisconsin and a theatre in Colorado, but many politicians have hesitated to approach the sensitive issue, especially in a national election year.

Police identified the gunman as Jeffrey Johnson, 58, a former designer of women's accessories who was laid off last year. They had little details yet about his background, including any criminal record.

Wearing a suit and tie and carrying a briefcase, Johnson wordlessly walked up to Hazan Import Corp vice-president Steven Ercolino, put a gun to his head and fired three times, according to authorities and witnesses.

"Jeffrey just came from behind two cars, pulled out his gun, put it up to Steve's head and shot him," said Carol Timan, whose daughter, Irene, was walking to Hazan Imports at the time with Ercolino.

Police Commissioner Ray Kelly said Johnson and Ercolino had traded accusations of harassment when Johnson worked at Hazan Import. Law enforcement officials said that Johnson had been angry that Ercolino wasn't promoting his products.

Ercolino's profile on the business networking site Linkedin identified him as a vice-president of sales at Hazan Import Corp. It said he was a graduate of the State University of New York at Oneonta.

A man who answered the phone at Ercolino's home in Warwick, northwest of Manhattan, said he was too distraught to talk.

"He was a good son, that's all I can say," said the man, who didn't give his name.

Johnson walked away after shooting Ercolino, but a construction worker who saw the encounter followed him and alerted police, officials said.

Construction worker Chris Ogden told the Daily News tabloid he was working on a scaffold above the scene when he saw someone in a suit and carrying a briefcase start shooting.

"He shot the guy in the head," Ogden told the newspaper. "The guy went down. He took a second shot when he was down."

Ogden said the gunman casually walked away. "We were screaming from the top, 'It's the guy in the grey suit!"' Ogden said.

Surveillance video footage shows Johnson reaching into a bag, pulling out a .45-calibre pistol and pointing it at officers, Kelly said. The officers started firing, killing him, Kelly said.

Kelly at first said Johnson fired on officers, but police later said they were trying to determine whether Johnson fired. The two officers fired a total of 14 rounds, Kelly said.

"These officers ... had absolutely no choice," Kelly said. "This individual took a gun out very close to them and perhaps fired at them."

Bloomberg said some of the nine wounded may have been shot by police in the mayhem. Johnson's semi-automatic weapon was equipped to fire at least eight rounds; at least one round was left in the clip, police said. Another loaded magazine was in his briefcase.

Robert Asika, who was shot in the right arm, said he was "100 per cent positive" that a police officer had shot him. He also said he saw Johnson fire his gun at the officers.

Hazan Import Corp imports women's clothing and accessories, according to public records. Johnson worked at the company near the building for about six years and was laid off because of downsizing, Kelly said.

Police scoured the scene for bullets as the immediate scene remained closed off on Friday, and tourists were kept at bay.

The Empire State Building anchors one of the city's busiest areas. The website for the building says about four million people visit the tower's observatory decks each year, and footpaths outside the building bustle with people selling tickets for its attractions.

The gunfire came less than two weeks after a knife-wielding man was shot dead by police near Times Square, another tourist-saturated part of the city. Authorities say police shot 51-year-old Darrius Kennedy after he lunged at officers with a kitchen knife August 12.

In 1997, a gunman opened fire on the 86th floor observation deck of the Empire State Building, killing one tourist and wounding six others before fatally shooting himself.

Metal detectors and bag searchers have been standard at the 102-storey skyscraper since the 1997 shooting.

The skyscraper and its observatories remained open throughout the mayhem Friday, the building's owner said.