The terrorist managed to flee the scene, but was recorded by security cameras.
The IDF, Shin Bet security service and Israel Police, including special forces units, launched a manhunt for the gunman, and deployed additional troops throughout the West Bank in order to prevent "copycat" incidents - a common phenomenon after high-profile terror attacks. An Israeli woman also shot in the attack says a Palestinian treated her wounds. Security forces were searching for the suspected perpetrator, Conricus said.
A second woman, aged 54, was taken to hospital with gunshot wounds to her upper body, MDA said.
The military said that the suspect used a homemade "Carlo" gun in the attack.
"Before the shooting [on Sunday], we would enter [Barkan] in 15 minutes; now I have to wait at the entrance of the industrial zone for an hour and a half before I can to get to work", Muayed Amer, a Palestinian laborer, told Anadolu Agency.
Mr Naalwa was not known to the authorities and was not believed to belong to a Palestinian militant group, but the Haaretz newspaper reported that he had given a colleague a note in which he said he planned to kill himself and praised the late Palestinian leader Yasser Arafat.More news: Hamilton edges closer to fifth title as Vettel crashes
Palestinians often face tough choices in finding employment under Israeli occupation, especially in the economically struggling West Bank.
A wave of Palestinian attacks against Israelis broke out in 2015, but they have since become sporadic.
Conricus said the attacker was employed in one of the factories and had a valid working permit.
Last month, a Palestinian teenager stabbed an Israeli to death at a junction at the entrance to a large bloc of Israeli settlements in the West Bank near Jerusalem.
A series of rallies in Gaza against Israel's siege of the territory since March have given rise to nearly weekly scenes of death on the border as Israeli snipers have picked off protesters.