Factory activity in the U.S. Mid-Atlantic region stalled in early September as new orders dived and costs doubled, one of the first business surveys conducted after Hurricane Katrina showed Thursday.
The Philadelphia Federal Reserve Bank said its business activity index plummeted to 2.2 in September from 17.5 in August, far below economists’ forecasts for a drop to 14.0.
The reading is just above the zero mark that separates growth from contraction in the region’s manufacturing sector.
Output had jumped in August before Hurricane Katrina hit parts of the U.S. Gulf Coast at the end of the month, affecting orders and pushing energy costs sharply higher.
The new orders index, a key indicator of future growth, dropped into negative territory for the first time since April 2003, falling to -0.5 in September from 19.8. Prices paid leaped to 52.7 in September from 25.9 in August and the employment index fell to 2.7 from 6.3 in August.
The regional survey is one of the first indicators of U.S. manufacturing every month and is often used to gauge the overall state of factories nationwide.